In a significant step towards achieving a sustainable agronomy in Pakistan, a prominent private-sector commercial bank, Habib Bank Limited (HBL), has announced the establishment of an agriculture-specialised company aimed at building production capacity for small and medium-sized farmers.
Speaking at the launch of the ‘Impact and Sustainability Report 2022’ on Monday, HBL President & CEO, Muhammad Aurangzeb, revealed that they recently obtained permission from the State Bank of Pakistan (SBP) to set up HBL Zarai (agriculture). The bank is now awaiting approval from the Securities and Exchange Commission of Pakistan (SECP) to officially launch the subsidiary.
While the bank will continue to provide agriculture financing as it currently does, the subsidiary will focus on offering non-financial services to farmers. These services will include establishing and operating storage facilities for surplus outputs, supplying agri-inputs like seeds and fertilisers, promoting water conservation practices during cultivation, and providing market intelligence to help farmers secure better prices for their crops and cattle.
Aurangzeb clarified that HBL Zarai is not a corporate social responsibility (CSR) project, meaning the company will charge for the services it provides. The storage capacity offered by the subsidiary will enable farmers to store their output and sell it when prices are favourable, providing them with greater control over their produce.
Highlighting the importance of dairy and livestock in the agriculture sector, Aurangzeb noted that it comprises approximately 60% of the industry but has been largely neglected from a financing perspective. Corporate entities have recently stepped in to support and boost the agriculture sector, with banks, insurance firms, fertiliser manufacturers, and food companies collaborating to address its shortcomings and enhance their businesses.
In a commitment to protect the environment, Aurangzeb announced that HBL will no longer finance coal-based projects. Instead, the bank has shifted its focus to renewable energy projects, including wind, solar, and hydel initiatives. Emphasising that the shift towards environment-friendly projects incurs some cost, Aurangzeb stressed that preserving the planet is of paramount importance, and sustainable earnings will follow as the world moves in the right direction.
The Impact and Sustainable Report 2022 reveals that HBL has developed its own green taxonomy (GT), directing capital flows to green projects aimed at climate change mitigation, adaption, pollution prevention and control, resources efficiency, and ecosystem conservation. The bank aims to achieve net-zero carbon emissions by 2030.
In the realm of corporate social responsibility, HBL has contributed over Rs4 billion over the past decade to support social uplift projects in Pakistan, with over Rs580 million contributed in 2022 alone. HBL Chairman, Sultan Ali Allana, highlighted the urgency of addressing climate challenges, particularly after devastating floods displaced millions and threatened livelihoods.
Urging collective action and a commitment to positive change, Allana emphasised the Aga Khan Development Network’s (AKDN) ethos, which HBL upholds through good governance and CSR practices. The bank’s commitment to sustainability extends beyond charitable giving, encompassing responsible business practices and a dedicated focus on environmental and social well-being.
Published in The Express Tribune, July 18th, 2023.
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