[Asia Exclusive] Kwon Jun-hak, Bank President: "NongHyup Bank Specialized in Green New Deal, ESG Is a Core Condition for Survival"

Interview with Kwon Jun-hak, President of NH Nonghyup Bank

Nonghyup Bank's Purpose is to Support Agriculture
Climate Change Has a Critical Impact on Agricultural Products

[Asia Economy Reporter Kiho Sung] "We are not focusing on ESG (Environmental, Social, Governance) simply because it is the trend of the times. Climate change has a serious impact on the supply and demand of agricultural products. This directly threatens agriculture and rural areas, which are the foundation of NongHyup's existence. That is why we are emphasizing ESG specialized for agriculture even more."

Four months into his tenure, Kwon Jun-hak, president of NH NongHyup Bank, is currently dedicating his utmost attention to ESG. Although ESG has become a key condition for corporate survival and a standard for corporate value, Kwon’s approach as the head of NongHyup Bank differs from other CEOs. As the only purely domestically capitalized bank in Korea, which grew based on agriculture and farmers, he carries the responsibility to give back to farmers and local communities. His challenge is to find solutions in ESG to overcome the crisis facing agriculture and rural areas and to contribute to farmers.

His management philosophy that "the answer lies in the field" explains why he spends much time visiting the field and listening to many opinions about ESG. Kwon’s interest in ESG is also confirmed by numbers. According to a survey by the Global Big Data Research Institute, among the five heads of domestic specialized banks in the first quarter of this year, he ranked first in big data volume for the keyword "ESG management."

Alongside digital financial innovation, Kwon is devising various plans to strengthen ESG management as his top priority this year. In particular, practical ESG initiatives closely related to daily life, such as the "NH Climate Action Campaign" and "Carbon Point System Interest Rate Benefits," are central.

Below is a Q&A with President Kwon.

"NongHyup Bank is a company specialized in ESG and Green New Deal... also plays the role of a national finance expert bank"

-You have had an unusually high number of field visits during your first 100 days in office. What is the reason?

△Under the restricted conditions due to COVID-19, I wanted to meet and communicate with farmers, customers, and employees to build a NongHyup Bank that grows one step further. What I felt on the ground is that NongHyup Bank has competitiveness that differentiates it from commercial banks in the agricultural industry and public finance sectors. ESG is becoming socially important, and the government is accelerating the Green New Deal projects. NongHyup Bank’s very purpose of existence is to support farmers and rural areas and to enhance the value of the agricultural industry. It is a company specialized in the Green New Deal. Also, I was able to reaffirm that it is firmly positioned as a national finance expert bank with long experience and accumulated know-how within the region.

-You often emphasize "ESG management specialized for agriculture." Could you elaborate?

△Climate change seriously affects the supply and demand of agricultural products, which directly threatens agriculture and rural areas, the foundation of NongHyup’s existence. Even before the term ESG emerged, NongHyup Bank has actively practiced green finance and eco-friendly management centered on agricultural and rural areas through agricultural finance, consulting for agricultural enterprises, helping with farm labor during busy seasons, collecting waste vinyl in rural areas, and repairing houses in rural communities.

NongHyup Bank has the strongest network in rural areas, including local agricultural and livestock cooperatives. As an agricultural finance specialized bank, it possesses know-how in agricultural policy funds, loans to agro-food companies, and investments in agricultural industry value funds. It is an environment where "ESG management specialized for agriculture" can be best implemented more than any other organization.

-Your visit to a smart farm instead of holding an inauguration ceremony?is that also a commitment to "agricultural ESG management"?

△Despite our efforts, rural aging and population decline are worsening day by day. We must increase farm income and create rural areas that attract young people. For example, we will induce a shift to smart agriculture based on advanced technology by expanding the distribution of eco-friendly smart farms linked with IT and artificial intelligence (AI). We plan to actively discover various projects such as financial support to improve living infrastructure in rural areas through cooperation with local governments.

"Individual customers also receive benefits from the Carbon Point System... will cooperate with big tech and fintech"

-What financial products are available to expand ESG management?

△For agro-food companies, we launched the "NH Agro-food Green Growth Loan" last October, which applied our proprietary ESG evaluation index, the NH Green Index, for the first time. As of the end of April, about 780 billion KRW had been promoted within six months of launch. For general companies, we launched the ESG-customized product "NH Eco-friendly Enterprise Preferential Loan" in March, offering preferential loan interest rates and limits to companies with excellent environmental evaluations and green certifications. To expand the base of ESG-specialized financial products, we are also preparing preferential products for individual customers. Starting from the 10th, we will provide financial services that offer interest rate benefits to individuals who have joined the Carbon Point System and practice eco-friendly green living. Along with this, we are promoting joining the "Equator Principles," which prohibit investments in project financing that cause environmental destruction or human rights violations, to establish an ESG risk management system that meets international standards.

-Besides ESG management, you are also focusing on the digital sector. Could you explain?

△This year, NongHyup Bank’s strategic goal is to leap forward as a "Beyond Bank, customer-centered comprehensive financial platform company." As the criteria for choosing financial transactions shift from "transaction bank" to "transaction channel," we plan to reexamine the direction of digital management from zero base and create a customer-centered integrated platform. Through the "NH Small Business Partner," a mobile platform exclusively for small business owners launched on the 19th of last month, we are strengthening corporate digital finance, and we will actively utilize the MyData business introduced in August to provide financial services necessary for customers’ daily lives.

-You are issuing real-name accounts for virtual currency. Are there additional business plans?

△NongHyup Bank provides services that allow customers to trade virtual currencies through partnerships with exchanges that meet certain requirements to ensure transparency in virtual currency transactions, in line with government policy, and to protect financial consumers. At the same time, we are strengthening anti-money laundering (AML) activities and making efforts to support legitimate transactions.