Some of the biggest banks in agriculture are looking to do their part to lower emissions, but to do that they will need to change the way they invest in agri-businesses. Here is how it could drive change in the industry.
The Banking for Impact on Climate in Agriculture Initiative, announced this week during COP26, is looking to turn net-zero commitments into action.
“Led by the World Business Council for Sustainable Development and EDF and other partners many large banks, global banks, including Rabobank, Wells Fargo, Santander, and others, have come together to figure out in a pre-competitive way what information they need to understand the greenhouse gas emissions profiles of their portfolios, and then how they can work with farmers and other community members to reduce those emissions,” Maggie Monast, EDF’s Senior Director of Climate-Smart Ag, explains.
She says that once banks better understand their portfolios, they can then invest in technologies that make a difference.
“We’ve heard a lot about methane during the COP conference, and while, you know, natural gas, oil, and gas wells and leaky pipes are really significant source, agriculture is also a major source. And so, I expect that to be a key area where people and companies throughout the supply chain, as well as their finance providers, will be looking for solutions,” Monast states.
She says that banks should also work towards lending models that support on-farm conservation.
According to Monast, “They need to get in there directly with their former clients and figure out what their farmer clients are doing that we are working for them to build resilience and to reduce emissions and what financial barriers the banks can help solve to allow more farmer to follow their lead.”
However, less than 10 percent of U.S. farmers are served by these major banks. She says that the model will need to include tools for all types of banks.
“I think we have to start somewhere and get some new lending programs or products out into the marketplace and have some farmers testing them,” she adds. “Then at the same time, we have to figure out how to make sure that those opportunities are available to farmers of all types, shapes, and sizes.”
Previous research from EDF has found a gap in transition funding for farmers looking to add conservation practices to their operations. It could be one issue the new initiative looks to address.
Related:
The outlook for biodiesel on the path to zero emissions
CEO of the Renewable Fuels Association reacts to the Zero Emission Vehicle Act
White House plans to address economic risk of climate change
Climate policy can be the bridge between environmental groups and ag groups
Creating a conservation plan that helps create profit