The role of banks in financing the agriculture and livestock sectors - Sept 2016

SEPTEMBER 2016
DO BANKS REAP WHAT THEY SOW?
THE ROLE OF BANKS IN FINANCING
THE AGRICULTURE
AND LIVESTOCK SECTORS

Solaron Sustainability Services2
Authors:
Aiswarya Sankar
aiswarya@solaron.in
Prasanth Nandakumar
prasanth@solaron.in
Sauravh Dubey
sauravh@solaron.in
Jayaprakash Mallikarjuna
jayaprakash@solaron.in
Co-authors:
Gine Zwart
Gustavo Pimentel
Evert Hassink
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We would like to thank Fair Finance Guide International (FFGI)
for providing us the opportunity to spearhead the study –
‘The role of financial institutions in financing the Agriculture
and Livestock sectors’
Our sincere gratitude goes to the FFGI Support Group and
the FFGI Methodology Review Group for their continuous
support, feedback and inputs for the preparation of this
report.
We also sincerely thank Mr. Dan Chivu who designed the
report and Ms. Simona Onicel for proofreading the report.
Last but not the least, our special thanks to all the banks
for participating in the study. They took out time from their
busy schedule to answer the questionnaire and proactively
shared the required information. The study would not have
been effective without their cooperation and timely inputs.
ACKNOWLEDGEMENTS

3The Role of Banks in Financing Agriculture and Livestock Sectors
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INDEX
EXECUTIVE SUMMARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
RATIONALE FOR THE STUDY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .15
AGRICULTURE & LIVESTOCK . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .15
PALM OIL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .17
SOY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .18
MEAT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
METHODOLOGY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
RESEARCH PROCESS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
TIME SPAN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
COMMUNICATION WITH FINANCIAL INSTITUTIONS . . . . . . . . . . . . . . . . . . . 22
TYPES OF FINANCING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
SCOPE OF SECTORAL ACTIVITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
DETAILED APPROACH . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
SELECTION OF COUNTRIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
SELECTION OF FINANCIAL INSTITUTIONS/BANKS . . . . . . . . . . . . . . . . . . 23
SELECTION OF CONTROVERSIAL COMPANIES . . . . . . . . . . . . . . . . . . . . .24
DEFINING THEMES AND INDICATORS FOR THE STUDY . . . . . . . . . . . . . . . 25
SCORING METHODOLOGY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
LIMITATIONS OF THE STUDY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
GLOBAL ANALYSIS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
KEY QUANTITATIVE INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
EXPOSURE TO AGRICULTURE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
AGRICULTURAL LENDING TRENDS – COUNTRY WISE . . . . . . . . . . . . . . . . . . . 33
AGRICULTURAL LENDING TRENDS – FINANCIAL INSTITUTIONS . . . . . . . . . . . . 33
PERFORMANCE OF FINANCIAL INSTITUTIONS . . . . . . . . . . . . . . . . . . . . . . 35
POLICIES FOR AGRICULTURE & LIVESTOCK SECTOR . . . . . . . . . . . . . . . . . . . 35
BANKS & THE CONTROVERSIAL LIST OF COMPANIES . . . . . . . . . . . . . . . 36
THEME- WISE RELATIVE PERFORMANCE ACROSS COUNTRIES . . . . . . . . . . . 37
COUNTRY ANALYSIS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
BELGIUM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
BRAZIL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
FRANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
GERMANY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
INDONESIA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97
JAPAN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 111

NETHERLANDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 124
SWEDEN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 143
ANNEXURE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 160
ABBREVIATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 160
DEFINITIONS & TERMINOLOGY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 161

EXECUTIVE
SUMMARY
With most of the world’s capital concentrated in the hands of financial institutions, these entities have a
crucial role to play in facilitating transitions from business as usual to sustainable economies. The great
potential of financial institutions lies in the fact that they can reach out to the masses and extend positive
influence over all entities – be it individuals, corporations and governments. In a way, financial institutions are
to a certain extent accountable for a majority of social and environmental injustices happening worldwide.
This can be attributed to the indirect impacts from their financial products and services. Though the direct
negative environmental and social impacts of entities in the financial sector are relatively insignificant,
it is the indirect impacts arising from their business activities that are highly damaging and material. As
financial institutions’ presence extends to every sector, industry and geography, it makes it increasingly dif-
ficult to estimate indirect social and environmental impacts arising from their activities. However, financial
institutions have a capacity to improve global sustainability through their indirect influence. The possibilities
to mitigate, control negative impacts and contribute to sustainable development are immense. Many banks
have started walking the path of sustainability. While some are taking baby steps towards the same, some
are quite mature and are already setting examples for others to follow suit.
Though the business case for incorporating sustainability into the business strategy of financial institutions
is compelling, only very few have taken the initiative towards moving in the right direction by incorporating
sustainability related risks and environmental, social and governance (ESG) criteria in their financing and
investment activities. While some banks have acknowledged the need to do so, there are others that need
to be influenced in order to consider more than just financial risks and returns. This is where the work of
the Fair Finance Guide International becomes immensely significant. FFGI released two reports in the last
year with a central focus on assessing the ‘Transparency and Accountability of policies in the financial
sector’ and ‘Analyzing trends in financing fossil fuels vs. renewables’. Hoping to extend their influence a bit
7Study of Climate Change Targets for India and China

further, this study is the third flagship study that aspires to shed more light on the investments of banks in
the agriculture and livestock sectors. This is done by analyzing the quality and implementation of policies
and system of banks when conducting business with companies from the agricultural and livestock sectors
in order to avoid deforestation, climate change, human and animal rights abuses.
THE REPORT IS BROKEN DOWN INTO SEVERAL SECTIONS.
• The first section of the report presents the rationale behind the study as to why the agricultural and
livestock sectors and the three commodities were chosen as areas of interest.
• Afterwards we have the methodology section, which explains in detail the objective of the study and
provides details regarding the approach taken in order to reach the desired outcomes.
• Actual analysis based on the findings of the study commences in the following section.
• Global analysis section: A broad overview of country-wise conclusions is covered in this section. Aspects
summarized include: trends of country wise disclosures, key quantitative data, overall results of the study
and highlighting of the best, moderate and low performers. A snapshot of the controversial relationships
has been provided in a tabular format that gives an overview of financial institutions’ relation with compa-
nies that have been catalogued as ‘controversial’.
• Analysis of financial Institutions - Bank snapshots/bank analysis sections have been prepared in detail with
information pertaining policies, implementation and performance with specific focus to the agricultural
and livestock sectors and the three commodities in question namely: palm oil, soy and meat. Furthermore,
an analysis of direct and indirect controversies of the financial institution is also done in this section.
• Country analysis sections: Following the bank analysis/snapshots of banks, key conclusions of financial
institutions from different countries have been presented. These are supported by quantitative information
such as country-wise agricultural lending figures and controversy trends.
This report analyses 42 financial institutions for their business practices with specific focus to the agricul-
tural and livestock sectors and three commodities: palm oil, soy and meat. Additionally, financial institutions’
relationships with major companies with controversies have also been looked into for establishing a rela-
tionship between the bank’s practices and ground realities. The total assets of 42 banks considered for the
study amounts to around EUR 22 trillion out of which lending figures are approximately EUR 9 trillion.
Collectively, the financial institutions considered for the study have a total lending exposure of EUR 300
billion to the agricultural sector. An interesting point to note is the fact that while financial institutions
disclose figures related to lending, those related to investments have been rarely disclosed. The investments
of financial institutions considered throughout this study are substantial, but the exact figures are not
disclosed. Hence, it would be safe to assume that EUR 300 billion is a gross underestimation of the actual
agri-investments.
Research revealed that less than half of the financial institutions considered for the study addressed issues
in the agricultural and livestock sectors either from a sustainability perspective; either by formulating a
central sustainability policy, responsible lending and investment policy applicable to all their operations or
through sector specific policies. Less than 25% of the banks have sector specific policies that particularly paid
attention to the environmental and social risks and impacts for addressing issues related to agri-business
and the three commodities. Out of the 42 financial institutions, only 7 were identified as ‘leaders’, 24 fell
under the ‘followers’ category, and 11 were categorized as ‘laggards’. It was noted that some of the financial
institutions had several initiatives planned for the near future regarding these sectors. This coupled with
the fact that more than half of the banks categorized under the ‘followers’ category indicate that there is
a transition, one which is slow but definite towards improving sustainability of financial institutions when it
comes to lending and investing in the agricultural and livestock sectors.
On an average, financial institutions from Netherlands and Sweden have demonstrated best performances
in all the six themes of the study when it comes to policies and implementation processes. Banks from
Germany and France have also proven best performances in some themes and reasonable in others. Brazil,
Belgium fall in the average performers’ category, while Japan and Indonesia display low performances for
most of the themes.

In the leaders category, four out of the seven financial institutions are from the Netherlands namely ABN
AMRO, Triodos, Rabobank and ING. In fifth place is SwedBank from Sweden followed by BNP Paribas from
France and GLS bank from Germany. In the followers category, Societe Generale and Credit Agricole from
France; Deutsche Bank from Germany; SEB and Handelsbanken from Sweden, Van Lanschot and Aegon
from Netherlands take top positions. Banco do Brazil, KBC bank, SMTH and HSBC are the top performing
banks from Brazil, Belgium, Japan and Indonesia respectively. HSBC is the only bank from Indonesia in the
followers category, while all the other banks have been classified as laggards
KEY FINDINGS OF THE STUDY
• Total agricultural lending exposure of banks considered for this study amount to EUR 300 billion (for the
32 banks that have reported)
• Less than 25% of the financial institutions considered for the study have sector specific policies that
address business practices of clients operating in the agricultural and livestock sectors.
• 50% of the banks considered for the study have absolutely no measures in place to govern business
practices of clients in the agricultural and livestock sectors.
• 36 out of 42 (85%) financial institutions have associations with one or more controversial companies
considered for the study.
• Only 6 financial institutions (15%) have no associations with any of the controversial companies consid-
ered for the study.
EXPOSURE TO AGRICULTURE
• All the 42 banks assessed throughout the study have exposure to the agricultural and livestock sectors.
However, only 40% (21) banks have some sort of policy to govern business practices of agri-business
clients.
• Out of these 21, only 10 have robust sector specific policies that address relevant social and environmental
impacts and commodity issues related to palm oil, soy and meat.
• Additionally, only a handful of banks have measures that cascade to include the clients’ supply chain prac-
tices into their assessments.
• Though most of the banks have both loans as well investments (direct and indirect) in the agricultural
and livestock sectors, these institutions consider it material only to report only on lending figures from
these sectors.
• 32 out of 42 banks have disclosed lending exposure to the agricultural sector. However, these have been
reported in varying categories such as ‘Agriculture & forestry’, ‘Agriculture & fisheries’, ‘Food & Agriculture’
etc.
• Only 1 bank (Aegon) has disclosed investments in the agricultural sector, including palm oil, soy and meat.
This was however not obtained from the public domain but shared during the response period of the study.
• Banks with exposure to the agricultural sector through their lending and investment business activities
render more importance to incorporating sustainability into their corporate lending and project financ-
ing activities. In most cases, incorporating ESG and sustainability risks into their direct and indirect
investments was not a priority for most banks.
• Examples of this include Deutsche Bank, Swedbank, HSBC, BNP Paribas and Santander among others.
Though these financial institutions have integrated basic ESG criteria into their investment portfolios,
these are done only for directly managed investments. These banks continue to have associations with
controversial companies through their business activities.

• Financial institutions such as LBBW, DZ Bank and Commerzbank from Germany and Belfius Bank from
Belgium have taken decisions not to invest directly in agricultural commodities, however they continue
to have indirect investments (third party funds or funds managed for clients).
• Another aspect of relevance is that, for some of the financial institutions, exposure to the agricultural
sector was rather small compared to other sectors. This could be a primary reason for companies
failing to address the sustainability risks related to this sector through formulation of policies. Specific
examples include Argenta and VDK Spaarbank from Belgium, LBBW from Germany and all the financial
institutions from Japan whose agricultural sector exposures are less than 1%.
• Additionally, most of the banks considered for this study operate majorly in the developed markets of
the European Union where most environmental and social aspects are legislated. Additionally, five out
of the eight countries are part of the European Union. This could be the reason as to why certain banks
from these countries find it immaterial to formulate policies and leave loose ends that could create
sustainability risks. Specific examples include:
• Argenta, Belfius, VDK Spaarbank and Crelan banks from Belgium
• LBBW, DZ Bank and Hypovereinsbank from Germany
• BPCE and Credit Mutuel from France.
LINKS WITH CONTROVERSIAL COMPANIES
• 36 out of the 42 financial institutions were found to have financial associations with 1 or more compa-
nies from the controversial list.
• Only 6 financial institutions were found to have no associations with companies in the controversial list.
The analysis of controversies was a significant task in the study, thus direct as well as indirect controversies
were assessed. The former involved identifying material controversies that banks were involved in, and the
latter brought out controversies of companies that these banks had financial relationships with. For arriving
at indirect controversies, a list of major palm oil, soy and meat companies and those involved in significant
Environmental, Social and Governance (ESG) issues were identified to map their financial relationships with
banks. The objective of the controversy analysis exercise was to assess the effectiveness of implementation
measures to comply with the sustainability practices and their own policies.
CONTROVERSY TRENDS
Robust sustainability commitments: A significant prerequisite for avoiding controversial
relationships
There is a clear relation between incorporating sustainability into the bank’s business strategy and having
associations with controversial companies. This is very evident in the case of both GLS and Triodos as both
these financial institutions have a strong stand stating that they will finance only client that demonstrate
sustainability in their business conduct. In this regard, both GLS and Triodos have stringent screening cri-
teria to weed out clients involved in controversial business practices and thus, they are not involved in any
controversies. Additionally, both GLS and Triodos strictly finances only agro-ecological farming or organic
agriculture, which further screens companies/clients involved in unsustainable agricultural practices.
Strong Policies but weak implementation mechanisms: Most banks finance controversial
companies despite the level of their policies
Certain banks were found to have associations with multiple controversial companies despite having
formulated sector specific policies and detailed sustainability risk frameworks. Specific examples for this
include Rabobank, BNP Paribas, ABN AMRO, HSBC, Swedbank, Deutsche bank, KBC, SEB, Santander, So-
ciete Generale and Credit Agricole. These financial institutions were found to have multiple associations
with controversial companies in spite of robust sector specific policies. This indicates gaps in the imple-

mentation mechanisms that need to be looked into at the earliest. In most of these financial institutions,
though pre-lending investments were good enough, they faltered on due diligence measures during the
post-lending phase with the absence of effective checks to validate continued client adherence to policies
and sustainability criteria.
Additionally, their termination criteria are also not strong enough and there are very few instances where
client relationships have been stopped. Banks consider termination of financial relationships as a last resort
and believe in engaging with companies to influence them positively. Though clients are urged to abide to
minimum requirements, granted a specified time to abide to these and are threatened with termination in
case these are not adhered to, financial relationships rarely end up broken.
Agricultural exposures - lending vs. investments:
Most of the controversial relationships have arisen from the financial institutions’ investments in the con-
troversial companies as opposed to lending. For instance, FIs such as Deutsche Bank, Swedbank, HSBC, BNP
Paribas, Santander, ABN AMRO, Rabobank etc. had investment relationships. This indicates that FIs have
paid more attention towards responsible lending than responsible investments. Furthermore, those FIs that
incorporated sustainability and ESG aspects in their investment activities did so only for direct investments.
The study revealed that indirect investments and third party funds were not subject to the same level of
assessment criteria and due diligence measures as directly managed funds. This highlights the limited
influence and control the bank has over these type of funds.
• However, there are a handful of banks that are trying to influence clients and incorporate ESG aspects into
their indirect investments and passive funds as well. Examples include Van Lanschot and Aegon from the
Netherlands and Belfius from Belgium.
RECOMMENDATIONS OF THE FAIR FINANCE GUIDE
INTERNATIONAL NETWORK
This flagship study focuses on the involvement of banks in the agriculture and livestock sector, with partic-
ular attention for palm oil, soy and meat (beef and pig). The report reveals the amounts lent to /invested in
these sectors and provides an assessment of the quality of policies and implementation systems.
The report shows that many banks still invest in controversial companies, for lack of adequate policies and
procedures, or despite the existence of own policies and implementation procedures aimed to avoid harmful
aspects related to agriculture sector.
RECOMMENDATIONS TO BANKS:
Policies
• Banks should adopt a sector specific investment policy on agriculture which sets specific Environmental
Social and Governance criteria for major commodities, including palm oil, soy and meat. The policy should
apply to all of the bank’s financial activities, including corporate credits, shareholdings and underwriting.
• Banks need clear red lines to prevent (or stop after engagement) harmful investments related to known
CSR concerns.
Implementation and engagement
• Banks should adopt a thorough set of procedures that enforce the above mentioned investment policy
on agriculture.
• Banks need to realize environmental and social impact assessments and use other relevant data (on
nature, humans, animals, climate change and human rights) in their investment decisions. Banks must
give higher priority to CSR impacts when deciding to invest or (re)finance in high impact sectors such
as palm oil / soy / meat industry.

• Banks should develop more, effective, result focused and time bound engagement strategies to actually
reduce the number of controversies they are linked to.
• Banks should include an assessment of the way their major agri- and food clients bear responsibility for
the companies that are part of their supply chains, as part of their lending/investment decision.
• Banks should implement pro-active/regular monitoring processes also in the post-financing/investment
phase, to keep up to date on potentially controversial developments.
Reporting
• Banks should improve transparency and report investments and lending on subsector-level, such as palm
oil / soy / meat industry, to enable investors, clients and other stakeholders in the bank to understand
what the bank is involved in and why and how CSR-efforts are geared to certain (sub)sectors
• Banks should report on the climate impact of their agri-lending and investments and implement policies
to reduce the total emission of their portfolio as well as the emissions of the specific companies they
finance.
• Banks should be transparent on the reasons for and results of engagement and/or exclusion of finance
clients.
RECOMMENDATIONS TO GOVERNMENTS:
• Governments should recognize agriculture is a very important contributor to climate change, and sup-
port, monitor and enforce application of due diligence systems in banks, regarding climate and other
CSR issues.
RECOMMENDATIONS TO FINANCIAL AUTHORITIES:
• Regulators should recognize that ESG issues can (positively or negatively) affect the financial perfor-
mance of companies and hence also banks.
• Financial Authorities should support and enforce the incorporation of ESG criteria into the credit risk
analysis of banks when investing in agri- and food companies.
• Financial Authorities should increase disclosure requirements of Financial Institutions regarding non-fi-
nancial information, covering their core business (i.e. lending and investments). This includes Environ-
mental Social and Governance risk management processes as well as transparency on investments/
clients.

INTRODUCTION
Fair Finance Guide International (FFGI) is an international civil society network initiated by Oxfam that
seeks to strengthen the commitment of banks and other financial institutions to social, environmental,
governmental and human rights standards. The FFGI network began in January 2014 and is presently being
implemented by coalitions of civil society organizations in 9 countries namely, Belgium, Brazil, France, Ger-
many, the Netherlands, Norway, Indonesia, Japan and Sweden, with Denmark and others in Asia ready to
join in 2017. FFGI pioneered the Fair Finance Guide web-based tool to assess and score bank’s policies on
a wide range of sustainability aspects. Two such annual assessments, country wise case study reports and
two flagship studies have been completed to date. The FFG web-based tool and research reports aim to
motivate continuous improvement and a ‘race to the top’ among financial entities on social, environmental
and governance issues through conscious lending, investments and asset management operations.
This study is the third flagship study of the FFGI and aspires to shed more light on banks’ investments in the
agriculture and livestock sectors and the quality and implementation of policies and governance systems of
banks for the avoidance of deforestation, climate change, human and animal rights abuses when investing
in, or lending to, agriculture and livestock production facilities and companies. This flagship study aims to
complement and leverage regular policy assessments of the banks that the FFGI undertakes every year and
the existing flagship studies of “Transparency and Accountability in the Financial Sector” and “Undermining
our Future”.

RATIONALE FOR THE STUDY
WHAT IS AT STAKE
FFGI’s second flagship study focused on the urgent
issue of fossil fuels that heighten climate change
and argued the imperative need to shift finances
to renewables. Energy production through fossil
fuel burning and processing is one of the major
contributors to climate change accountable for
34% of global emissions1
. Agriculture, forestry and
land use change (including deforestation) comes a
close second accounting for nearly 24%2
of global
1 ‘Climate Change 2014: Mitigation of Climate Change’,
Working Group III Contribution to the Fifth Assessment
Report of the Intergovernmental Panel on Climate Change,
Edited by: Edenhofer, O., R. Pichs-Madruga, Y. Sokona, J.C.
Minx , E. Farahani, S. Kadner, K. Seyboth, A. Adler, I. Baum,
S. Brunner, P. Eickemeier, B. Kriemann, J. Savolainen, S.
Schlömer, C. von Stechow and T. Zwickel; Cambridge Uni-
versity Press, New York, NY, USA | https://www.ipcc.ch/pdf/
assessment-report/ar5/wg3/ipcc_wg3_ar5_full.pdf
2 The AFOLU sector falls closest to our study as it includes
(but not limited to) operations in agriculture and livestock
and includes GHG emissions from the material aspects
in this sector. Out of Agriculture, forestry and other land
use sector (AFOLU), only agriculture and land use change
related to agriculture is within the scope of our study.
GHG emissions in 2010 according to the same IPCC
2014 synthesis report. Hence it is imperative to
draw attention to this large contributor to climate
change. Extending focus on the agriculture and
livestock sector thus strengthens FFGI’s advo-
cacy towards a more sustainable financial sector
worldwide. In addition to climate impacts, the
agriculture and livestock sector is also known for
other predominant issues such as human rights,
labour rights, animal welfare, land grabs and land
tenure issues. Thus a flagship study focusing on
the agriculture and livestock sector would bring
clarity and helps painting a real picture of banks’
involvement in these sectors, reveal the amounts
lent/invested in these sectors and the quality of
currently applicable policies and implementation
systems. In addition to our focus on agriculture and
livestock sector, we render particular attention to
three priority commodities due to their carbon in-
tensive nature and substantial ecological footprint:
palm oil, soy and meat (beef and pig)

AGRICULTURE & LIVESTOCK
According to the IPCC fifth assessment report
released in 2014, the Agriculture, Forestry and
Other Land Use (AFOLU) sector was responsible
for just under a quarter (approx. 10-12 GtCO2
eq/
yr) of anthropogenic GHG emissions mainly com-
ing from deforestation and agricultural emissions
from livestock, soil and nutrient management.3
A
breakdown of the AFOLU sector gives a clearer
picture. For the period 2001-20104
, the largest
emission source was agriculture (50%), followed
by net forest conversion (38%), peat degradation
i.e. cultivation of organic soils and peat fires (11%)
and biomass fires (1%).
Anthropogenic GHG emissions,
for AFOLU sector
Agriculture 50%
Net forest conversion 38%
Peat degradation/fires 11%
Biomass fires 1%
The dynamics of climate change and agriculture are
highlyinter-connected.Notonlyagricultureandrelated
activities are one of the primary contributors of green-
house gases, but the negative effects of global warm-
ing such as changes in global temperatures, weather
and rainfall patterns (among others) can have a dev-
astating impact on agricultural operations globally. In
order to maintain the change in our planet’s tempera-
ture well below the tipping point of 1.5 degrees Celsius
and cope with climate change risks that arise every-
3 ‘Climate Change 2014: Mitigation of Climate Change’,
Working Group III Contribution to the Fifth Assessment
Report of the Intergovernmental Panel on Climate Change,
Edited by: Edenhofer, O., R. Pichs-Madruga, Y. Sokona, J.C.
Minx , E. Farahani, S. Kadner, K. Seyboth, A. Adler, I. Baum,
S. Brunner, P. Eickemeier, B. Kriemann, J. Savolainen, S.
Schlömer, C. von Stechow and T. Zwickel; Cambridge Uni-
versity Press, New York, NY, USA | https://www.ipcc.ch/pdf/
assessment-report/ar5/wg3/ipcc_wg3_ar5_full.pdf
4 ‘Agriculture, Forestry and Other Land Use Emissions by
Sources and Removals by Sinks’ - 1990-2011 Analysis, F.N.
Tubiello, M. Salvatore, R.D. Cóndor Golec, A. Ferrara, S. Ros-
si, R. Biancalani, S. Federici, H. Jacobs, A. Flammini; March
2014 | http://www.fao.org/docrep/019/i3671e/i3671e.pdf
day, both mitigation as well as adaptation strategies
in the AFOLU sector and others are urgently needed.
Research reveals that just four commodities
drive more than half of global deforestation:
Beef, Palm Oil, Soy and Forestry5
. Global emissions
due to deforestation are highly damaging as for-
ests store enormous amounts of carbon and when
destroyed these are released into the atmosphere
increasing the rate of global warming. Forests are
the habitat of millions of species of flora, fauna,
source of livelihood for numerous indigenous
communities and crucial for preserving biodiver-
sity. The tropic regions have become preferred
locations for large scale industrial commodity
operations due to a mix of factors: all-year-round
growing season, huge swathes of cheap land and
low labour costs, among others. Agriculture is the
largest contributor of global anthropogenic non-
CO2
greenhouse gases that constitute around 30%
of the total GHG emissions6
. At 45% of global non-
CO2
emissions, it is expected to remain the largest
contributor to GHG emissions up to 2030. Over the
years, the proportion has decreased in percentage
points from 58% in 1990 (US EPA, 2012) to 54%
in 2005 (US EPA, 2012)7
. The main sources for
non-CO2
anthropogenic emissions in agriculture
are agricultural soils, enteric fermentation, rice
cultivation, manure management.
Non CO2 Emissions Brakeup
Agriculture Sector 2001-2011
enteric fermentation (40%)
burning of savanna (5%)
manure management (7%)
rice cultivation (10%)
synthetic fertilizers (13%)
manure left on pasture (15%)
Global Non-CO2
emissions trend
2001-2011
agriculture
5 ‘Other Deforestation Drivers‘, Union of Concerned Scientists
(UCS) | http://www.ucsusa.org/global-warming/stop-defor-
estation/other-deforestation-drivers#.V-N_DPl97IU
6 ‘Global Anthropogenic Non-CO2, Greenhouse Gas Emis-
sions: 1990 - 2030’, Office of Atmospheric Programs,
Climate Change Division, U.S. EPA; December 2012 | https://
www.epa.gov/sites/production/files/2016-08/documents/
epa_global_nonco2_projections_dec2012.pdf
7 ‘Global Anthropogenic Non-CO2, Greenhouse Gas Emis-
sions: 1990 - 2030’, Office of Atmospheric Programs,
Climate Change Division, U.S. EPA; December 2012 | https://
www.epa.gov/sites/production/files/2016-08/documents/
epa_global_nonco2_projections_dec2012.pdf

Analyzing the trends between 2001-2011, emis-
sions8
from enteric fermentation were the greatest
contributor to agricultural emissions (40%), fol-
lowed by manure left on pasture (16%), synthetic
fertilizers (13%), rice cultivation (10%), manure
management (7%) and burning of the savannah
(5%).
In the mid-80s traditional animal farming practic-
es, which were more welfare friendly, witnessed
a shift to industrialized farming practices. These
modern industrialized systems supported larger
numbers of animals per unit area and resulted in
greater production trends making them the norm.
With low interest in animal welfare practices and
environmentally sustainable trends, animals are
merely seen as production units and confined to
cages, crates and pens devoid of adequate space
and clean surroundings.
As specified above, it might be surprising to know
that the largest sources of CO2
from animal agri-
culture come from the inputs and land-use chang-
es necessary to maintain and feed the animals and
not from the animals themselves. The main emit-
ters of CO2
are burning of fossil fuels to produce
fertilizers (such as artificial nitrogenous fertilizer)
for feed production (feed include soy, barley, corn
among others), energy use for maintaining inten-
sive animal production facilities9
transporting and
processing activities and changing landscapes
due to deforestation, land degradation and de-
sertification. There is a dire need of a shift from
uncontrolled factory farming practices to more
sustainable animal rearing initiatives. Otherwise,
emissions from this sector are bound to increase
steeply due to rising consumptions globally.
PALM OIL
Palm oil, which constitutes a third of all vegetable
oil consumed in the world, is an ingredient found
in thousands of daily used products such as
packaged food, confectionary, cosmetics, biofuel
8 ‘Palm Oil Market Is Anticipated To Grow To $88 Billion By
2022: New Report By Grand View Research, Inc.’, Grand
View Research; July 27, 2015 | https://globenewswire.
com/news-release/2015/07/27/755234/10143225/en/
Palm-Oil-Market-Is-Anticipated-To-Grow-To-88-Billion-
By-2022-New-Report-By-Grand-View-Research-Inc.html
9 (Electricity use in intensive farms makes up a large part of
this energy expenditure, especially for ventilating, heating,
and cooling monogastric operations, such as pig or chicken
meat production facilities)
among others. The rise in palm oil consumption
and demand has been a recent phenomenon due
to its versatility, low prices, high productivity when
compared to other oil extracting crops and an apt
choice for product manufacturers’ seeking alter-
natives to animal fats. Around 85% of the global
palm oil plantations are found in Indonesia and
Malaysia where oil palm is their most important
cash crop. Forests and other tropical ecosystems
elsewhere in Asia, Africa and Latin America are
at risk due to the exponential increase of palm
oil production in Indonesia and Malaysia as well
as other countries’ commitments to increase their
market share in palm oil production. Global palm
oil market demand was 74.01 million tons in 2014
and is expected to reach 128.20 million tons by
2022, growing at a CAGR of 7.3% from 2014 to
2022, the palm oil market Is anticipated to grow to
$88 Billion by 202210
$88
Billion
Growth
74.01 million tons
128.2 million tons
2014
2022
Anticipated Growth of Global
Palm Oil Market Demand
However, benefits related to palm oil come at a
high price: irreversible environmental impacts,
massive land-use changes due to deforestation,
destruction of biodiversity, native forests, endemic
flora and fauna and increasing greenhouse gas
emissions. Increasing demands have caused palm
oil cultivation to shift from traditional subsistence
methods, from being one of many crops planted
in small-scale agricultural systems to large-scale
mono-cropping. The current methods of palm oil
production are highly unsustainable and are the
primary reason for destruction of carbon-rich trop-
ical rainforests and peatlands. Plantations cover
5.2 million hectares (12.8 million acres) of tropical
peatland in Indonesia and Malaysia. Around 75%
10 ‘Palm Oil Market Is Anticipated To Grow To $88 Billion By
2022: New Report By Grand View Research, Inc.’, Grand
View Research; July 27, 2015 | https://globenewswire.
com/news-release/2015/07/27/755234/10143225/en/
Palm-Oil-Market-Is-Anticipated-To-Grow-To-88-Billion-
By-2022-New-Report-By-Grand-View-Research-Inc.html

of these are oil palm plantations11
. Emissions from
these drained areas total 263 megatons (Mt) of
CO2
per year—equivalent to emissions from 70
coal plants12
. Each hectare of tropical peat drained
for plantation development emits an average of 55
metric tons of CO2
every year, rough equivalent to
burning more than 6,000 gallons of gasoline (WRI
2016)13
. Peatlands are huge storehouses of carbon
having the capacity to hold as much as 18 to 28
times14
more carbon than the forests above them.
Drained and burned peatlands release trapped car-
bon and methane into the atmosphere for decades
contributing to global warming. Emissions due
just to palm oil cultivation in Indonesia accounted
for an estimated 2 to 9% of all tropical land use
emissions between 2000 and 201015
.
Indonesia has been by far the most affected
country by palm oil plantations. According to sta-
tistics16
, every year, 1.8 billion tons (Gt) of climate
changing greenhouse gas (GHG) emissions are
released by the degradation and burning of Indo-
nesia’s peatlands – 4% of global GHG emissions
from less than 0.1% of the land on Earth. Since
the turn of the century, large parts of land have
been deforested for palm oil farming, leading to an
enormous amount of carbon being released into
the atmosphere. According to new estimates, 98%
of the Indonesian rainforest may be destroyed by
11 ‘Land cover distribution in the peatlands of Peninsular
Malaysia, Sumatra and Borneo in 2015 with changes
since 1990’, Jukka Miettinen, Chenghua Shi, Soo Chin
Liew; Centre for Remote Imaging, Sensing and Processing
(CRISP), National University of Singapore (NUS); December
2015 | http://www.sciencedirect.com/science/article/pii/
S2351989415300470
12 ‘Destruction of Tropical Peatland Is an Overlooked Source
of Emissions’, Nancy Harris, Sarah Sargent; World Resource
Institute; April 21, 2016 | http://www.wri.org/blog/2016/04/
destruction-tropical-peatland-overlooked-source-emissions
13 ‘Destruction of Tropical Peatland Is an Overlooked Source
of Emissions’, Nancy Harris, Sarah Sargent; World Resource
Institute; April 21, 2016 | http://www.wri.org/blog/2016/04/
destruction-tropical-peatland-overlooked-source-emissions
14 Page SE, Rieley JO, and Banks CJ. Global and regional
importance of the tropical peatland carbon pool, February
2011
15 Palm Oil and Global Warming’, Union of Concerned
Scientists; December 2013 | http://www.ucsusa.org/sites/
default/files/legacy/assets/documents/global_warming/
palm-oil-and-global-warming.pdf
16 ‘How the palm oil industry is cooking the Climate’, Green-
peace; November, 2007 | http://www.greenpeace.org/in-
ternational/Global/international/planet-2/report/2007/11/
cooking-the-climate-full.pdf
2022.
In addition to negative impacts on the environment
and towards global warming, there are other seri-
ous concerns such as the impact on biodiversity,
violations of human and labour rights of workers
and affected communities. Research suggests that
only about 15% of native animal species17
can
survive the transition from primary forest to plan-
tation. Among the species vulnerable to palm oil
expansion are orangutans, tigers, rhinoceros, and
elephants. Estimates18
suggest that Orangutan
Bornean species have reduced to less than 54,000
and the Sumatran species at 6,600.
The key reason for the violations of human and
labour rights is the fact that majority of palm oil
operations are concentrated in countries where
weak labour laws are accompanied by poor en-
forcement. The FAO 2013 report highlights the
top 10 palm oil producing countries as Indonesia,
Malaysia, Thailand, Columbia, Nigeria, Papa New
Guinea, Côte d’Ivoire, Honduras, Cameroon and
Brazil. Businesses are manifestly taking advantage
of the weak labour and human rights regulations
and instead of setting up group-wide standards,
they just stick to local mandates, which are insuf-
ficient to prevent violations of and controversies in
human and labour rights. Even though companies
have certain measures in place to address these,
they seldom safeguard these measures across their
supply chain. Though initiatives like the Roundtable
for Sustainable Palm Oil Production have been set
up, this only addresses a small percentage of palm
oil entities and their supply chains. Hence a multi-
tude of issues in these markets range from child
labour, forced labour, unsafe and unfair working
conditions, land-related conflicts, land grabbing,
infringing the rights of indigenous peoples, forced
evacuation and displacement of communities
among others.
SOY
United States, Brazil and Argentina are the top 3
soy-producing countries in the world. Similar to
palm oil, soy plantations also paved the destruc-
17 ‘How will oil palm expansion affect biodiversity?’, Emily B.
Fitzherbert, Matthew J. Struebig, Alexandra Morel, Finn
Danielsen, Carsten A. Brühl, Paul F. Donald, Ben Phalan;
Volume 23, Issue 10, October 2008 | http://www.cell.com/
trends/ecology-evolution/fulltext/S0169-5347(08)00252-8
18 http://wwf.panda.org/wwf_news/wwf_needs_your_help/
orangutans_victims_human_activity

tion of native forests and drove major changes in
land use in these areas. Tropical ecosystems that
are also great storehouses of carbon are the Am-
azon rainforests, Brazil and Argentina’s Cerrado
ecosystem and savannahs along with endemic
species such as the Jaquar and the giant anteater.
Land area converted for Soybean expansions in
the United States and Brazil from 2008 to 2012
is quite staggering reaching 0.6 and 3.4 million
hectares respectively. CO2
emissions due to these
expansions translate to around 3.4 and 1.5 million
metrics tons respectively. With the Soybean De-
rivatives Market set to soar to $254.9 Billion by
202019
, it is clear that production rates will increase
exponentially. If current unsustainable trends for
soy production continue, unimaginable areas of
land occupied by forests, grasslands and native
indigenous lands would be converted for expansion
of soy plantations accompanied by a host of social
and environmental consequences. Hence, it is
imperative that current and prospective entities in
the soy value chain shift to sustainable practices
as soon as possible.
Soybean Derivatives Market Trend
$ 254.9 Billion2020
Unprecedented growth in soy cultivation has
displaced large numbers of small holders and
marginal farmers growing other crops for sub-
sistence. According to the World Wildlife Fund, in
Brazil, soybean cultivation displaces 11 agricultur-
al workers for each one who finds employment in
the sector20
. Large-scale mono cropping, extensive
use of agro-chemicals and use of unsustainable
agricultural practices have severely impacted the
quality of soil and agricultural land. Subsequent
soil erosion and dangerous runoff has proven
highly damaging to surface and groundwater
sources, to the health of nearby communities and
wildlife. A World Bank study estimates that a third
of all pesticides used in Brazil are used in soybean
cultivation, mainly the herbicide glyphosate (trade
name Roundup) used in genetically modified soy-
bean production. Many studies assert a direct link
glyphosate - increasingly found in communities
19 http://www.marketsandmarkets.com/PressReleases/soy-
bean-derivatives.asp
20 Facts & Data, Habitat conversion & soy, WWF | http://
wwf.panda.org/what_we_do/footprint/agriculture/ soy/
impacts/habitat_conversion
near soy plantations - to reproductive disorders,
genetic damage, liver tumors, disrupted embryo
development and development delays in mammals.
The expansion of soy farms is also a primary cause
for land-related conflicts, especially as large-scale
plantation businesses encroach upon indigenous
and family owned land. This is largely done through
forged property contracts and illegal involvement
of local authorities. Land conflict trends suggest
that despite ownership, locals are on the losing
end as they find it difficult to stand up and fight
for their rights. Another pertinent problem in the
soy sector is the presence of genetically modified
soy, which has been developed to improve produc-
tion rates, tolerate herbicides etc. As most of the
worlds’ soy, around 70-80%21
, is consumed as ani-
mal feedstock while raising them for dairy or meat,
it is evident that GM soy has long entered the food
chain. Some compelling numbers disclosed by the
world wildlife fund support this claim; and average
grams of soy used per kilo of pork, beef, eggs and
chicken amount to 263, 173, 307 and 575 grams
respectively22
.
MEAT
Among the AFOLU (Agriculture, forestry and land
use change) activities, farm animal production
/ livestock-farming sector is the single largest
anthropogenic user of land, contributing to soil
degradation, dwindling water supplies and air
pollution. According to the Food and Agriculture
Organization (FAO) of the United Nations (UN),
the animal agriculture sector is responsible
for approximately 14.5% of human-induced
greenhouse gas (GHG) emissions23
. Beef and
cattle milk production account for the majority
of emissions, contributing to 41% and 20%, re-
21 Facts & Data, ‘Solving the Soy problem’, WWF | http://wwf.
panda.org/what_we_do/footprint/agriculture/ soy
22 Facts & Data, ‘Soy is everywhere’, WWF | http://wwf.
panda.org/what_we_do/footprint/ agriculture/soy/facts/
23 ‘Tackling Climate Change through Livestock - A global
assessment of emissions and mitigation opportunities’,
Gerber, P.J., Steinfeld, H., Henderson, B., Mottet, A., Opio, C.,
Dijkman, J., Falcucci, A. & Tempio, G.; Food and Agriculture
Organization of the United Nations (FAO), Rome; 2013 |
http://www.fao.org/3/i3437e.pdf

spectively, of this sector’s emissions24
. While pig
meat, poultry meat and eggs contribute to 9 %
and 8%, respectively, to the sector’s emissions25
.
GHG Emissions
Livestock & Agriculture Sector
Beef 41%
Cattle milk 20%
Pig meat 9%
Poultry meat & eggs 8%
Total
GHG
Emissions
Livestock
Agriculture
sector
14,5%
The strong projected growth of this production will
result in higher emission shares and volumes over
time. It is projected that demand for meat in 2050
will grow by 73 % from 2010. Feed production and
processing (including the expansion of pasture
and feed crops into forests), and enteric fermen-
tation from ruminants are the two main sources
of emissions, representing 45% and 39% of this
sector’s emissions, respectively. Manure storage
and processing represent 10%. The remainder is
attributable to the processing and transportation
of animal products. CH4
emissions from enteric
fermentation are projected to increase by 13.7%,
from 2,080 million tons of CO2
in 2012 to 2,365
million tons in 2030, (FAO 2015). Global CH4
and
N2
O emissions from manure management are
projected to increase by 13.4% from 364 million
tons of CO2
in 2012 to 413 million tons in 2030,
(FAO 2015).
Among meat and animal products, operations
related to beef cattle has the largest negative eco-
logical impact. Forest lands are getting converted
into pastures for grazing purposes. As mentioned
earlier, not only is beef one of the four main drivers
of deforestation globally, it is also accountable for
more than twice as much deforestation caused
by palm oil, soy and forestry together. Other than
deforestation, beef cattle are a massive emitter
of greenhouse gases. The digestion process of
cattle release substantial amounts of methane
and nitrous oxide, both of which are more harmful
than carbon dioxide in terms of global warming
potential.
The animal agriculture sector is also a significant
driver of desertification due to overgrazing of
farm animals, destruction of the vegetative cover
and release of trapped carbon. The FAO estimates
that animal agriculture-induced desertification of
pastures may release up to 100 million tonnes of
CO2
per year26
.
26 ‘Livestock’s Long Shadow - Environmental Issues and
Options’, Henning Steinfeld Pierre Gerber Tom Wassenaar
Vincent Castel Mauricio Rosales Cees de Haan; Food and
Agriculture Organization of the United Nations (FAO), Rome;
2006

METHODOLOGY
OBJECTIVE
The central objective of this flagship study is to assess the quality of governance, processes, systems and
resources of Financial Institutions (FIs) when investing in, or lending to agriculture and livestock production
facilities and companies in order to avoid deforestation, climate change, human and labour rights abus-
es and animal maltreatment. This study aims to highlight the current practices of FIs, transparency and
disclosure of data related to the agriculture and livestock sectors in general, with additional emphasis on
palm oil, soy and meat sub-sectors. Through this study, we hope to encourage FIs to be more proactive in
addressing concerns related to environmental and social issues in these two sectors. We also encourage FIs
to advocate adequate control to ensure that clients make the transition to sustainable production methods
and practices in the near future.
RESEARCH PROCESS
This flagship publication assesses the quality of policies, implementation aspects and governance systems
of selected FIs, when investing in, or lending to agriculture and livestock production facilities and companies.
This research has undertaken the following steps in order to meet the research objective:
• Preparation of the draft methodology document
• Methodology sent for feedback to FFGI coalition and incorporation of subsequent feedback
• Selection of banks/financial institutions with FFGI
• Compiling list of FIs to be part of the study after incorporation of FFGI coalitions’ recommendations and
confirmation.

• Selection of the 10 major palm oil, soy and meat companies for the purposes of this study
• Selection of palm oil, soy and meat companies involved in major ESG27
controversies
• Choosing 6 themes for this study; Governance and Implementation, Human Rights, Animal Welfare,
Labour Rights, Environment, Climate Change
• Development of indicators for each of the selected themes
• Feedback on the chosen indicators from FFGI coalition partners
• Incorporation of feedback and finalisation of indicators
• Development of the data collection template
• Development of scoring methodology for theme-based indicators
• Finalizing the scoring methodology after discussion and feedback from FFGI coalition partners
• Mapping the relationship of financial institutions with major palm oil, soy and meat companies and
companies involved in controversies
• Collection and compilation of relevant controversies for FIs, major palm oil, soy and meat companies and
controversial list of companies.
• Data collection and scoring of all 48 selected financial institutions
• Pre-filled data collection templates and scores sent to all financial institutions researched
• Incorporation of responses received from financial institutions
• Analysis of data
• Writing final report
TIME SPAN
• All report, publications and disclosures up to the 30th
of June 2016 have been considered for the data
collection process of the study
• Only Controversies from the past 3 years have been considered for controversy analysis
(1st
July 2013 – 30th
June 2016)
COMMUNICATION WITH FINANCIAL INSTITUTIONS
• Introductory briefing email including proposed timeline of the study was sent to all FIs during the first
week of May.
• Questionnaires were emailed to FIs to support data collection and scoring process for the study in the
last week of May 2016. FIs had until the 25th
of June to send back their filled in questionnaires.
• Pre-filled data collection templates, scores and a brief methodology document were shared with the
Dutch and Swedish FIs on the 13th
of July and with the rest of the FIs from Germany, France, Brazil,
Indonesia, Japan, and Belgium on the 22nd
of July. FIs had until the 12th
of August to react to scores and
provide additional input.
• FIs were requested to provide complementary information to that found by Solaron on key quantitative
data on the 27th
of July. FIs had until the 5th
of August to provide lending and investment figures for
agriculture and livestock and for the three commodities.
27 Environmental, Social and Governance

TYPES OF FINANCING
Financial institutions have the following options for investing: provide credit to companies, invest directly
in equity and/or debt, invest with money from third parties (asset management). Additionally, they can also
underwrite shares and issue bonds. The study assesses financial institutions according to their various
financing activities – primarily corporate lending, investing and asset management.
• Corporate Lending: Financial institutions provide loans to corporate for business growth, acquisition
finance or operations’ execution. There are different types of corporate lending including asset-based
lending, structured finance, and cash flow lending.
• Investing: Financial institutions commit capital to a business or project with the expectation of obtaining
a share of income/profit. Typically, these are long-term commitments. It can be investment in shares or
debt of companies.
• Asset Management: Financial institutions manage investments for clients. They coordinate and oversee
clients’ financial portfolio including investments.
Scoring assessment has been done on the basis of measures and systems in place for their primary business activities
i.e. either lending, investing or asset management. However, we have also highlighted aspects on measures and sys-
tems for other business activities.
Regarding the assessment of financial institutions with different primary businesses, we have identified
indicators which are applicable only to certain business activities viz. lending or asset management activities.
These indicators are ignored for scoring if the primary business activity is not the same. In this way, assess-
ment of FIs with lending as their primary activities is not exactly the same as for FIs with asset management
as the primary business. In general, there are quite a number of indicators which are applicable to both
lending and asset management businesses within their own scope. However, expectations are that these
adhere to the same standards on the applicable indicators.
SCOPE OF SECTORAL ACTIVITIES
• ‘Agriculture’ sector financing comprises all finances and investments offered to agri-businesses which
include players involved in the upstream and midstream operation processes that includes (but not
limited to) – food crops (such as wheat, rice etc.) and cash crops (such as cotton, tobacco) etc.
• ‘Livestock’ refers to all activities related to animal rearing for food or other purposes (except animal
testing) and can include (but not limited to) cows, pigs, goats, poultry, sheep etc. The focus is not limited
to slaughterhouses, but includes both upstream and midstream entities as well as feed suppliers.
DETAILED APPROACH
SELECTION OF COUNTRIES
For the study, countries were selected on the basis of where the FFGI currently has coalitions. FFGI is
active in 8 countries namely Germany, Netherlands, France, Belgium, Sweden, Japan, Indonesia and Brazil,
therefore our scope is limited to financial institutions headquartered / based in these countries.
SELECTION OF FINANCIAL INSTITUTIONS/BANKS
The selection of financial institutions was done based on the following factors:
• exposure to the agriculture and livestock industry, with an additional emphasis on palm oil, soy and meat;
• trends in terms of lending, investments and assets under management.
However, research revealed that many FIs did not publicly disclose data on lending and investments in these
sectors and information on finances lent/invested in palm oil, soy and meat were unavailable. Consequently,
the recommendation of the FFGI coalition on the selection of financial institutions in the eight countries was
considered. The recommendations of the FFGI coalition on the selection of financial institutions in these 8
countries coupled with the intent of complementing the existing FFGI studies and regular policy assessment
gave rise to the final list of financial institutions.

Table 1: Final List of Financial Institutions
BELGIUM
Crelan Bank SA
Belfius Bank
KBC Bank
VDK Spaarbank
Argenta
BRAZIL
Banco do Brasil
Bradesco
Caixa Econômica Federal
Itaú Unibanco
Santander Brasil
GERMANY
Deutsche Bank
Commerzbank
DZ Bank
GLS Bank
Landesbank Baden-Württemberg (LBBW)
HypoVereinsbank
FRANCE
BNP Paribas
Société Générale
Crédit Agricole
Banques Populaires-Caisse d’épargne (BPCE)
Crédit Mutuel-CIC
INDONESIA
Bank Mandiri
Bank Central Asia (BCA)
Bank Negara Indonesia (BNI)
Bank Rakyat Indonesia (BRI)
HSBC Indonesia
NETHERLANDS
Rabobank
ING Bank
ABN AMRO Bank
Van Lanschot
Triodos Bank
AEGON
SWEDEN
Nordea
Skandinaviska Enskilda Banken (SEB)
Handelsbanken
Swedbank
Danske Bank
JAPAN
Mitsubhishi UFJ Financial Group (MUFG)
Mizuho Bank
Sumitomo Mitsui Financial Group (SMFG)
Sumitomo Mitsui Trust Holdings (SMTH)
Norinchukin Bank
SELECTION OF CONTROVERSIAL COMPANIES
Financial institutions are knowingly or unknowingly co-responsible for certain unsustainable practices in
the agriculture and livestock sector including violations of human, labour and animal rights and irreversible
negative impacts on the environment and climate change. Involvement in controversies and controversial
companies is primarily a consequence of weak policies and implementation measures. An analysis of con-
troversies can therefore provide an insight into the weaknesses of the implementations mechanisms and
indicate potential focus shifts that may improve the status quo. An analysis of the FIs direct and indirect
controversies is carried out in order to holistically assess the effectiveness of the FIs’ implementation
mechanisms.
For this controversy analysis exercise, we first identified 10 major companies28
involved in the palm oil, soy and
meat commodities. In addition to these thirty companies, 20 more entities involved in material ESG controver-
28 10 Major companies for each of the commodities

sies were identified. Collectively, this generated a unique list consisting of 4829
controversial companies. This
list of controversial companies has been employed to assess the indirect controversies of FIs and to analyse
the controversy trends of financial institutions while lending to/investing in the agriculture and livestock sector.
To facilitate the controversy analysis of FIs, we first ascertained whether those considered for the study
had any financial relationships with the selected controversial companies. This relationship mapping exer-
cise was carried out using a combination of research initiatives. Financial research databases and reports
were used to determine the existence and the type of financial relationship. For the flagship study, any
involvement with a controversial company is considered unfavourable regardless of the time period of the
relationship and the amount invested. The relationships have been typically looked in for the three year
period from 2013 to 2016
Major Palm oil, Soy and Meat companies
The inclusion of major players are material as they hold significant market shares in these 3 commodity
markets rendering their direct environmental and social impacts substantial. Additionally, they are involved
in a multitude of ESG controversies because of the magnitude of operations. Furthermore, mapping re-
lationships between the selected FIs and the major palm oil, soy and meat companies help us uncover the
exposure of FIs to these 3 commodities in terms of lending and investments.
The method of selection of these major palm oil, soy and meat companies is the following30
:
• Major Palm Oil companies – A list of the 50 largest companies active in the palm oil business globally was
first compiled using the Sustainable Palm Oil Transparency Toolkit (SPOTT). Information pertaining to land-
bank and market cap was also collected from the toolkit. Subsequently, financial information was assessed
for these companies in order to identify the 10 largest palm oil companies to be included in the study.
• Major Soy companies – Unlike Palm oil, there were no publicly traded companies focusing exclusively on
growing soybeans. A mixed approach was adopted for finalizing the major soy companies. We analysed
agribusiness firms that provide products and services to farmers, their profitability trends and annual
production of feedstock. We also referred to certain reports such as the Greenpeace’s ‘Eating up the
Amazon’ that specifically highlights major players in the soy industry. The analysis revealed that certain
major palm oil companies also fell in this category.
• Major meat companies – An approach similar to arriving at major soy companies was adopted here.
Firms with substantial exposure to the beef and pork food businesses were assessed according to their
size and revenue trends in order to obtain the major meat companies.
Table 2: Major Palm Oil, Soy & Meat Companies
MAJOR PALM OIL COMPANIES MAJOR SOY COMPANIES MAJOR MEAT COMPANIES
Archer Daniels Midland Company Archer Daniels Midland Company BRF SA
Felda Global Ventures Holdings
Sdn Bhd
Bunge Ltd. Cargill Meat Solutions
Golden Agri Resources Ltd Cargill, Inc. ConAgra Foods Inc.
IOI Corporation Bhd CP Group Hormel Foods
Kuala Lumpur Kepong Bhd CPP China JBS SA
Noble Group Ltd Grupo André Maggi (Amaggi Group) Kraft Heinz Co.
Olam International Ltd New Hope Liuhe Leucadia National Corp.
Salim Ivomas Pratama Tbk PT Purina Animal Nutrition Pilgrim’s Pride Corp.
Sime Darby Plantation Sdn Bhd Tyson Foods (broiler) Seaboard Corp.
Wilmar International Ltd Wen's Food Group Tyson Foods, Inc.
29 Sime Darby and ADM have been counted only once
30 Supporting numbers for the selectionhas been given in the Annexure

Companies Involved in ESG Controversies
In addition to the major palm oil, soy and meat companies, we also identified a number of companies
involved in material ESG controversies. The related commodity for which material controversies have been
identified has been included in brackets in the table below.
Table 3: Companies involved in ESG Controversies
COMPANIES INVOLVED IN CONTROVERSIES
Astra Agro Lestari Tbk PT (Palm Oil) Kencana Agri Group (Palm Oil)
Bollore Group (Palm Oil) Marfrig Global Foods SA (Meat)
Bumitama Agri Ltd (Palm Oil) Minerva Foods (Meat)
Carrefour SA (Meat) Monsanto Co (Soy)
Censoud SA (Meat) Companhia Brasiliera De Distribuicao (Meat)
Colgate Palmolive (Palm oil) Sime Darby BHD (Palm Oil)
Grupo Pereira - comper (Meat) Syngenta AG (Soy)
Grupo DB (Meat) Walmart Brazil (Meat)
PT Indofood Sukses Makmur Tbk PT (Palm Oil) Y Yamada Sa Comercio E Industria (Meat)
B&G Foods (Beef) Darling Ingredients Inc. (Meat)
The selected companies were involved in a number of issues related to the 6 themes of the study; Con-
troversies include, among others, child and forced labour, illegal deforestation, land grabbing, water con-
tamination, poor working conditions, pesticide contamination, ill-treatment of animals and campaigning
against GMO-labelling. Evidence suggests that these companies failed to put in place measures to address
these issues in their operations as well as in their supply chain. Companies such as Monsanto, Syngenta
and Conagra are among the companies with more controversies related to governance practices. Meat
companies such as BRF, JBS and Tyson foods are linked to various labour abuses, in addition to ill-treatment
of farmed animals and water pollution. Furthermore, Wilmar, Golden Agri, Cargill and Monsanto are among
the companies linked to high environmental impact compared to the others in the study. A detailed list of
controversies related to each company has been provided in the Annexes (in final report) supported by type,
date and source links
DEFINING THEMES AND INDICATORS FOR THE STUDY
As mentioned above, this flagship study aims to complement the previous FFG flagship studies, the case
studies on national level and regular policy assessments conducted every year. According to this and to the
specific requirements put forth in the terms of reference, the following themes of the study were chosen:
Themes & Indicators
Governance &
Implementation
Human Rights
Labour Rights
Animal Welfare
Environment
Climate Change
‘Governance & Implementation’ is the only new theme that has been specifically formulated for this study
with the maximum number of indicators. The cross-sectoral impacts of all other themes and the fact that is-
sues are mostly focused on these aspects for the agriculture and livestock sector make these themes crucial

for this study. Once these topics were established, indicators were developed for each theme in accordance
to aspects relevant to the agriculture and livestock sector and specific to the commodities considered
(palm oil, soy and meat) wherever necessary. Relevant international guidelines, certifications, standards,
roundtable publications and current best practices of financial institutions were considered in order to
finalise these indicators. The indicators for each theme were formulated to understand/investigate the
actual implementation and performance of agriculture and livestock sector policies, thereby complimenting
the regular policy assessments of the FFGI that evaluates financial institutions on the basis of the existence
of such policies. A list of standards and publications31
used for formulating indicators is listed below:
• EU regulations and guidelines on animal welfare
• Recommendations of the Food and Agriculture Organization of the United Nations (FAO)
• Recommendations of the World Organization for Animal Health (OIE)
• IFC’s good practice note on animal welfare
• Global Roundtable for Sustainable Beef (GRSB)
• Prevention of Cruelty to Animals (RSPCA)
• The Business Benchmark on Farm Animal Welfare
• Roundtable on Sustainable Palm Oil (RSPO)
• Basel Criteria for Responsible Soy production
• The Soy Moratorium
• Roundtable for Responsible Soy (RTRS)
• Sustainable Agriculture Network (SAN)
• The ProTerra Standard for Social Responsibility and Environmental Sustainability
• Global GAP Guidelines (Good Agricultural Practices)
• ISEAL Alliance
Themes & Indicators32
• Governance & Implementation: Indicators for this theme focus on the general governance and imple-
mentation aspects of FIs. Indicators have been formulated to capture FIs implementation measures
across different sub-themes, such as: general governance aspects, pre-lending/investment, post-lending/
investment and commodity-specific ones. The pre- and post-lending/investment sub-themes are meant
to capture the most substantial aspects related to how FIs govern the business practices of their clients.
• Pre-lending/investing sub-theme assesses FIs practices put in place prior to lending to and investing in
clients. It verifies if FIs advocate for carrying out environmental and social impact assessments, existence
of denial criteria specific to agriculture, livestock, palm oil, soy and meat to their. Other aspects include the
FIs’ threshold criteria for conducting sustainability risk assessments, due-diligence measures and whether
there is a dedicated team for assessing compliance of clients to policy and internal/external guidance.
• Similarly, the post-lending/investing sub-theme aims to assess the FIs’ practices and due diligence pro-
cesses once finance has been granted.
The objective is to understand the systems and processes meant to check and assess clients on the men-
tioned sub-themes. As specified in the above section ‘Types of Financing’, the FIs’ measures and systems
for their primary business activity are considered for scoring the indicators under the pre-lending and
31 Details and links of these standards and publications can be found in the Annex of the report. (annex to be included in the final report)
32 Detailed list of indicators have been included in the Annex (annex to be included in the final report)

post-lending sub-themes.
• Human Rights: The aim of this theme is to understand whether FIs have integrated human rights risk
aspects into their policy framework such as respecting rights of communities, adherence to land ten-
ure and land-use rights, training programs. Since Soy farming involves usage of high quantities of
agro-chemicals and pesticides, the commodity-specific questions focus on how companies investigate
health conditions, provide medical assistance, check for birth defects and engage with relevant stake-
holders to minimize the incidence of these issues.
• Labour Rights: Similar to human rights, this theme seeks to assess whether rights of workers, labour-re-
lated implementation and measures considered by FIs to assess and monitor clients. Information on how
FIs address working conditions of labourers, prevention of child and forced labour, health and safety and
supply chain interventions is examined.
• Animal Welfare: This theme is primarily applicable to financial institutions that directly or indirectly finance
livestock operations; looks into the FIs’ procedures to check clients’ adherence to the five freedoms of
animals; animal welfare aspects, treatment and transport criteria among others are assessed here.
• Environment: Indicators that fall within the scope of this theme assess FIs on their implementation
approach to incorporate various biodiversity-related risks into the core risk management function.
Various biodiversity risks included are preventing encroachment of operations into environmentally
sensitive locations and nature reserves, deforestation, water management, restriction and management
of agro-chemicals, and pesticides among others.
• Climate Change: The theme aims to check whether FIs have incorporated climate change risks as part of
assessment criteria for clients. This section seeks information on what processes and measures FIs have
put in place to ensure that clients do not encroach peatlands, follow a no-burn policies, post plantation
agricultural practices and initiatives to reduce greenhouse gas emissions.
SCORING METHODOLOGY
After selecting the themes and defining the indicators, the next step focused on finalising the scoring meth-
odology to be used for generating indicator scores, theme-based scores and finally the overall bank score.
Therefore, indicators that complemented each other were clubbed and scoring tables were formulated.
Indicators are scored on a scale of ‘0’ (zero) to ‘10’ with ‘0’ indicating low or no disclosure and ‘10’ indicating
the best possible measures in place. Different scoring options and corresponding scores have been framed
considering the expected and feasible best practices. A sample scoring options for an indicator is shown below.
Table 4: Sample – Scoring options
DOES THE BANK/FI HAVE AN INTERNAL/EXTERNAL TEAM FOR TECHNICAL GUIDANCE ?
Scoring Options Scores
No disclosure OR The bank/FI does not have an internal/external team for technical guidance 0
The bank/FI has an internal/external team for technical guidance, but discloses limited information
on their expertise/ services provided.
3
The bank/FI has an internal/external team for technical guidance and discloses ample/detailed
information on their expertise. However, they do not place specific focus on thematic areas and
commodities for the assessment of the company’s performance.
7
The bank/FI has an internal/external team for technical guidance and discloses ample/detailed
information on their expertise. They also place specific focus on thematic areas and commodities
for the assessment of the company’s performance.
10

Aggregation of indicator levels scores to overall scores is based on the rules below:
• Indicators of a sub-theme are given equal weights. The average of these indicator scores yield the
scores for the sub-theme.
• Sub-themes under a theme are given differential weights leading to weighted average of sub-themes
and subsequently generate thematic scores.
• Similarly, weighted average of thematic scores lead to overall disclosure-based score of the financial
institution.
Governance and Implementation being the most important theme aiming to assess the overall implemen-
tation of policies by a financial institution, has been given the maximum weight of 75%. Maximum weights
have been assigned for this section as this theme assesses the most important aspects related to the
agriculture and livestock sector and the three commodities in question such as pre- and post- financing
implementation measures, sector and commodity specific policies and systems in place. The differential
weights assigned for all sub-themes and themes are found in the table below:
Table 5: Weights for themes and sub-themes
THEMES WEIGHTS
Sub-themes Sub-Themes Themes
Governance & Implementation 75%
General Governance 10%
Pre-Lending Assessment 30%
Post Lending Assessment 20%
Asset Management Business 10%
Commodities (Palm Oil, Soy and Meat) 30%
Human Rights 5%
General 50%
Animal Welfare 5%
General 100%
Labour Rights 5%
General 50%
Environment 5%
General 50%
Climate Change 5%
General 50%

LIMITATIONS OF THE STUDY
• A central questionnaire has been adopted to assess FIs that have different business models. However,
we have tried to address this issue by considering measures and systems in place for the FIs’ primary
business activity which could be either lending, investing or asset management.
• Sensitive financial information on investment activities of FIs in the agriculture and livestock sector such
as underwriting, share issuances and bonds were not available in the public domain or in the financial
disclosures of FIs. Only lending figures for the agriculture sector were disclosed to a certain extent by
FIs. However, not all FIs have specified loans to agriculture and livestock. Moreover, the lending catego-
ries were reported inconsistently under different labels such as ‘Agriculture & Forestry’, ‘Agriculture &
Fisheries’, ‘Agriculture, forestry & hunting’ among others.
• Any type of financial relationship was taken into account for the purposes of determining the relationship
between FIs and controversial companies. The time period of the financial relationship and the amount
invested have not been explicitly considered, as the information is not available in public domain for all
companies or financial relations.

GLOBAL
ANALYSIS
Five out of the eight countries considered for the study namely: Belgium, France, Germany, Netherlands and
Sweden are part of the European Union. For these countries, in addition to the national regulations, they
need to demonstrate adherence to EU standards and policies. The applicability of these cascades to the
agriculture and livestock sector as well. Additionally, a large part of the food sector in the EU has been fully
harmonized33
highlighting that individual Member States are not permitted to have stricter or more liberal
provisions. The governments have effective control mechanisms that observe if laws are in place and one
can safely assume that the agriculture and livestock sustainability is quite mature as compared to other
countries considered for the study. EU’s common agricultural policy (CAP) applies to these countries with
central objectives of viable food production, sustainable management of natural resources and balanced
development of rural areas in the EU. Under the CAP, each EU country is eligible to receive investments
until 2020 in order to enable faster transition regarding jobs, sustainability, modernization, innovation and
quality in the agricultural sector.
As most of the banks from these countries obtain a substantial percentage of revenues from their home
markets, they are exposed to reduced social and environment related risks. However, the same cannot be
said about their operations in other countries where the regulatory markets are weaker. Though most banks
have group-wide policies for governing clients’ business practices, controversies connected to negative
environmental and social impacts outside home markets indicate that these have not been sufficient to
keep issues at bay. To address material aspects related to the agricultural and livestock sector, it would be
prudent to set group-wide polices instead of relying on regulations in the activating markets.
Highlighted below are some the key figures that have been deduced from the quantitative data disclosed by
the 42 financial institutions considered for the study.
33 http://www.government.se/sweden-in-the-eu/eu-policy-areas/agriculture-fisheries-and-food/

KEY QUANTITATIVE INFORMATION
• Total assets of banks considered for the study – approximately EUR 22 trillion
• Total lending figures of banks considered for the study – around EUR 9 trillion (for the 40 banks that
have reported the same).
All the 42 banks considered for the study have exposure to the agricultural sector either through their
lending, investment or asset management business activities.
• 32 out of 42 financial institution/banks disclose lending exposure to Agriculture34
• These 32 financial institution/banks lend approximately EUR 300 billion to the agricultural sector.
• Average lending to the agricultural sector (as a percentage of total lending) is just below 5%
• 6 banks have more than 10% of total lending to agriculture:
• Rabobank from the Netherlands
• Banco do Brazil from Brazil
• Bank Central Asia, Bank Negara Indonesia, Bank Rakyat Indonesia, Bank Mandiri from Indonesia
• Commodity specific disclosure
• Palm Oil - Only 3 financial institutions/banks disclose lending figures to the palm oil sector
• Bank Mandiri from Indonesia
• Soy - Only 1 financial institutions/bank discloses lending figures to the soy sector
• Meat – Only 4 financial institutions/banks have disclosed lending figures to the meat sector.
• Rabobank and Triodos bank from the Netherlands
• Rabobank has also disclosed figures for the beef and pork sectors
• Handelsbanken from Sweden
34 The reporting category ‘Agriculture’ or closest to Agriculture has been considered for analysis such as.’Agriculture & forestry’,
‘Agriculture, fisheries & hunting, Agriculture & fisheries’ etc.

AGRICULTURAL LENDING TRENDS – COUNTRY WISE
Below is a graph depicting the country-wise agricultural lending exposure.
Netherlands has recorded the highest exposure to the agricultural sector. This is primarily because of Ra-
bobank’s lending exposure of EUR 97 billion. Japan shows the least exposure to agriculture through lending
business activities.
Agricultural Lending Exposure (EUR Billion)
Legend: ■ EUR Billions
AGRICULTURAL LENDING TRENDS – FINANCIAL INSTITUTIONS
• Below is the graph that highlights the agricultural lending exposures of financial institutions. While
banks from Netherlands, France and Brazil highlight substantial exposures to the agricultural sector, the
Japanese, German and Belgian banks have relatively low exposure.

Agricultural Lending Exposure (EUR Billion)

PERFORMANCE OF FINANCIAL INSTITUTIONS
LEADERS
(Score of 6 & above)
FOLLOWERS
(Score between 2 & 6)
LAGGARDS
(Score of less than 2)
ABN AMRO (7.81) Societe Generale (5.49) LBBW (1.81)
Triodos Bank (7.72) Deutsche Bank (5.09) VDK Spaarbank (1.55)
Rabobank (7.67) Van Lanschot (4.92) Credit Mutuel (1.54)
ING Bank (7.63) SEB (4.68) SMFG (1.45)
Swedbank (6.96) Credit Agricole (4.50) Argenta (0.96)
BNP Paribas (6.42) HSBC (4.34) Bank Mandiri (0.84)
GLS Bank (6.07) Santander (4.27) Norinchukin (0.68)
Handelsbanken (4.24) Crelan (0.47)
KBC (4.18) BNI (0.38)
Aegon (4.16) BRI (0.27)
Banco do Brazil (4.04) BCA (0.23)
Commerzbank (3.23)
Itau Unibanco (3.18)
Danske (2.9)
SMTH (2.89)
Caixa (2.52)
Belfius (2.51)
DZ Bank (2.49)
Mizuho Bank (2.32)
Nordea (2.17)
MUFG (2.15)
Hypovereinsbank (2.12)
BPCE (2.12)
Banco Bradesco (2.06)
POLICIES FOR AGRICULTURE & LIVESTOCK SECTOR
• Only 10 out 42 financial institutions/banks have detailed robust policies in place for the agriculture
sector lending/investments, which also specifies commodity specific aspects pertaining to palm oil,
soy and meat. This indicates that less than 25% of the banks are capable of appropriate governance of
a client’s/companies’ practices when it comes to mitigating environmental and social impacts arising
from the agricultural sector. Below are the financial institutions that have sector specific policies for the
agriculture sector that addresses aspects related to palm oil, soy and meat?
• Santander from Brazil
• GLS and Deutsche banks from Germany
• Societe Generale and BNP Paribas from France
• ABN AMRO, Triodos, Rabobank and ING from the Netherlands
• Swedbank from Sweden
• Around 11 financial institutions have some sort of general sustainability policy in place to address clients’
practices in the agricultural sector. This accounts for around 26% of the banks considered for the study.
Below are the banks that have a form of policy that addresses certain aspects related to the agricultural
sector but lack specific criteria for palm oil, soy or meat?

• KBC and VDK Spaarbank from Belgium
• Commerzbank from Germany
• Credit from France
• HSBC from Indonesia
• Van Lanschot and Aegon from the Netherlands
• Danske bank, Handelsbanken and SEB from Sweden
BANKS & THE CONTROVERSIAL LIST OF COMPANIES
• 36 financial institutions/banks from our research universe of 42 have a financial relationship with 1 or
more companies found on the list of 48 controversial companies considered for the study.
• HSBC, Deutsche Bank and BNP Paribas have more than 20 controversial relationships each.
• Only six companies have absolutely no financial relationships with companies in the controversial list.
These are:
• Hypovereinsbank and GLS bank from Germany
• Crelan and VDK Spaarbank from Belgium
• BPCE and Credit Mutuel from France
Captured below is the relationship table that shows the relationships of the financial institutions with con-
troversial companies considered for the study.
RELATIONSHIP TABLE – CONTROVERSY TRENDS
NETHERLANDS GERMANY
TRIODOS 1 HYPOVEREINSBANK 0
VAN LANSCHOT 1 GLS 0
ING 9 DZ BANK 3
ABN AMRO 9 LBBW 5
AEGON 11 COMMERZBANK 8
RABOBANK 12 DEUTSCHE BANK 26
INDONESIA BELGIUM
BANK NEGARA 3 CRELAN 0
BANK CENTRAL ASIA 3 VDK SPAARBANK 0
BANK RAKYAT 3 ARGENTA 1
BANK MANDIRI 5 BELFIUS 2
HSBC 29 KBC 12
Triodos Bank 1
JAPAN SWEDEN
NORINCHUKIN 4 DANSKE BANK 3
SMFG 5 SEB 6
MIZUHO 7 NORDEA 8
SMTH 11 HANDELSBANKEN 11
MUFG 12 SWEDBANK 19

FRANCE BRAZIL
BPCE 0 BANCO DO BRAZIL 2
CREDIT MUTUEL 0 CAIXA 4
SOCIETE GENERALE 8 SANTANDER 6
CREDIT AGRICOLE 11 ITAU UNIBANCO 7
BNP PARIBAS 24 BANCO BRADESCO 7
THEME- WISE RELATIVE PERFORMANCE ACROSS COUNTRIES
The below table gives a high-level indication of the performance of countries considered with regard to the six core
themes of the study. As can be noted, Netherlands and Sweden are the best performers whereas Indonesia and
Japan have been classified as low performers for the core themes.
CORE THEME BEST PERFORMERS
MODERATE
PERFORMERS
LOW PERFORMERS
GOVERNANCE &
IMPLEMENTATION
Netherlands /
Sweden / France
Germany / Brazil /
Belgium / Japan
Indonesia
HUMAN RIGHTS
Netherlands /
Sweden / France
Germany / Brazil /
Belgium
Indonesia / Japan
ANIMAL WELFARE
Netherlands /
Sweden / Germany
Brazil / Belgium /
France
Indonesia / Japan
LABOUR RIGHTS
Netherlands /
Sweden / Germany
Brazil / Belgium /
France
Indonesia / Japan
ENVIRONMENT
Netherlands /
Sweden / France
Germany / Brazil /
Belgium
Indonesia / Japan
CLIMATE CHANGE
Netherlands
Sweden / Brazil
Germany / France
Japan
Indonesia / Belgium

COUNTRY
ANALYSIS
BELGIUM
AGRICULTURAL EXPOSURE (EUR billion)
FINANCIAL INSTITUTIONS EXPOSURE EXPOSURE LEVEL
ARGENTA ND NA
VDK SPAARBANK ND NA
CRELAN 0.0 XS
BELFIUS 0.1 XS
KBC 4.3 M
• All Belgian Banks have exposures to the agricultural sector. In the case of Argenta and VDK Spaarbank,
it is evident that the exposure is insignificant and therefore has not been reported. KBC has the highest
exposure with EUR 4.3 billion.
• Collectively, lending exposure to the agricultural sector from Belgian banks amount to EUR 4.4 billion.
• Only Crelan, Belfius and KBC disclose their lending exposure to the agricultural sector. Reported catego-
ries include ‘Agriculture, Farming & Fishing’ and ‘Agriculture and Livestock’
• None of the banks disclose lending figures to the palm oil, soy and meat sectors.

COUNTRY OVERVIEW
CRELAN
BANK SA
ARGENTA
VDK
SPAARBANK
BELFIUS
BANK
KBC BANK
Overall Scores 0.31 0.96 1.47 2.87 4.08
Governance & Implementation 0.4 1.1 1.5 3.2 4.5
Human Rights 0.0 0.6 1.0 0.6 4.6
Animal Welfare 0.0 0.0 0.7 0.9 0.7
Labour Rights 0.0 1.7 1.7 3.3 3.7
Environment 0.0 0.3 2.4 3.4 2.5
Climate Change 0.0 0.0 1.3 1.8 2.3
All Belgian banks - except KBC and Belfius bank - demonstrate poor performance when it comes to policies
and implementation measures in the agricultural and livestock sector. These are the only two banks with
measures for addressing sector-specific issues. KBC’s pre- and post-lending monitoring measures are the
best among all Belgian banks, followed by Belfius. All the other three banks have weak governance measures
with Crelan being the poorest performer. With regard to policies for the agricultural sector, only KBC and
Belfius have some measures to address business practices of clients from this sector. Additionally, KBC has
addressed certain palm oil specific criteria.
VDK and Argenta have minimal initiatives across all the themes resulting in low score trends. This can be
attributed directly to the absence of relevant policies and guidelines for the two sectors. A point to be noted
is that VDK and Argenta’s exposure to the two sectors and three sub-sectors in question is insignificant,
thus they have not addressed it.
Other than KBC, low scores for all other Belgian banks can be attributed to the relevance of the agricultural
and livestock sector in terms of the lending portfolio. With the exception of Crelan for which the agricultural
sector accounted for 14.4% of the lending portfolio, for KBC and Belfius, this sector accounted for only 3%
and 1% of their respective lending portfolios. Since exposures are small, banks may find it irrelevant to
address it. However, this does not justify the absence of central sustainability policies to govern the overall
business practices of banks and their clients.
CONTROVERSIAL RELATIONSHIPS
CRELAN 0
VDK SPAARBANK 0
ARGENTA 1
BELFIUS 2
KBC 12
With regard to controversies, KBC bank has the maximum number of financial relationships with companies
on the controversial list. This raises concerns in light of KBC’s policies, implementation measures and claims
of being highly selective in financing clients whose activities involve and/or result in substantial environ-
mental and social risks. Most of these associations originated through their investments and it is imperative
that KBC prioritizes company engagement and sets stringent criteria for terminating investments in case
of non-compliance. Belfius bank’s associations can be attributed to the fact that it carries out on-going
dialogues only with a small percentage of companies. This requires improvement in the near future for
suppressing sustainability related risks.
It was found that Crelan has no business relationships with any institution on the controversial companies
list. However, it would be advisable to set up certain sustainability criteria for minimizing negative social and
environmental impacts of clients as the agricultural sector accounts for 14% of the bank’s lending portfolio.

The role of banks in financing the agriculture and livestock sectors - Sept 2016

The role of banks in financing the agriculture and livestock sectors - Sept 2016

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