ProCredit Holding: Flying High – ESG Edge Report

Published on 21 December 2020

ProCredit Holding: Flying High

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ESG Edge Report

ProCredit (PCB) is a Germany-based group operating  regional banks across Southeastern and Eastern Europe, as well as in Ecuador. The banks focus on SMEs and private middle-income and high earners. At end-September 2020, the group’s total assets stood at €7.1bn. ProCredit has extensive experience in supporting small and medium-sized enterprises (SMEs) in emerging economies, with a focus on Southeastern (SEE) and Eastern Europe (EE) and banking operations in Ecuador.

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PCB aims to positively contribute to the economic, social and environmental situation in these regions regions and create shareholder value in the process. This has been supported with a dynamic growth of its green loan portfolio (CAGR of 34% in 2016-2019), prudent credit, social and environmental risk management as well as long-term oriented approach to its clients and staff. PCB’s environmental, social and governance (ESG) efforts are reflected in its outperformance vs peers in the ESG scoring system that we have applied.

Edison’s ESG Edge analysis aims to move away from historical data and focus on forward looking drivers and indicators. Our methodology starts by grounding our work through the analysis of the data points of other data providers and ratings agencies’. Our ESG Edge scores are derived in collaboration with our partner Rebalance and follow the guidelines of the Sustainable Accounting Standards Board (SASB) and use the Cambridge Impact Framework. We follow this up with management and employee interviews to validate our findings and get to the narrative behind the data. Our findings are condensed in this report to focus on key ESG drivers, transition opportunities and risks for the company. Please see our website for a more detailed overview of our methodology.

Visibly outperforming peers in ESG Scores

In 2019, PCB outperformed its peers (i.e. Erste Group, Raiffeisen International, TBC Bank and ABN Amro) in the ESG Edge Score, which measures companies’ ESG and socio-political performance on a scale of 0 to 5 (0 being poor performance, 5 an excellent performance). PCB’s MSCI ESG rating is AA, which places it among the top 15% of companies rated by MSCI in the banking sector worldwide.

Visibly outperforming peers in ESG Scores

In the medium term, PCB’s aims to increase the relative size of its green loan portfolio to 20% of the total loan book (vs c 18% at end-Q320), while still maintaining its high credit quality as illustrated by the share of credit impaired loans in gross green loan book of 0.3% at end-H120 (vs 2.3% at group level at end-Q320). Over the same period, it plans to become carbon neutral with respect to its own CO2 emissions (these were down 19% y-o-y in 2019) and increase the level of social and environmental competence among its employees (underpinned by its in-house ProCredit Academy in Fürth).