June 21, 2022

Financing the positive transition for nature in the agricultural sector

Private finance has an important role to play in accelerating the transition to regenerative agriculture by actively increasing information and access to green finance specifically tailored to farmers and food producers.

  • Possible solutions could include farmers and businesses in the food supply chain working together to reduce emissions and store carbon. By using specific metrics for on-farm reduction and sequestration programs, food companies can verifiably reduce their own Scope 3 (supply chain) emissions through direct financial support to farmers. In this way, the benefit of reduced emissions is shared between the farmer and the buyer.
  • This requires that government, farmers and the food supply chain agree on a common set of metrics that comprehensively measure the sustainable results of changing farming practices. By doing so, farmers can be rewarded for achieving their goals by the government, their supply chain customers and even other private sector actors who want to support nature-based solutions in the UK.
  • The financial sector can also participate in the validation of this mechanism, bringing a perspective of solvency to these dynamics. Recognizing that farmers’ efforts to reduce emissions will make their business more attractive to their retail customers (and help reduce risk), banks can then factor this into the cost of lending.
  • Banks can also partner with food retailers to provide transition financing to their farmers to reduce emissions in a holistic and scalable way.
  • More broadly, funding is also needed to provide innovative solutions in the management of farms and the industrial food system. For example, satellite data can help farmers sustainably manage their farms within a larger ecological system, while preparing for extreme weather shocks and adapting to long-term weather effects. Blockchain solutions can also enable traceability and transparency on the carbon footprint of food production.

Read Maria’s full article (PDF 4 MB) here

To find out more about our support for the agricultural sector, please contact Ian Burrow, Head of Agriculture and Energy: [email protected]

Disclosures

This material is published by NatWest Group plc (“NatWest Group”), for information purposes only and should not be considered to provide specific advice. Recipients should make their own independent evaluation of this information, and no action should be taken, based solely on it. This material must not be reproduced or disclosed without our consent. It is not intended for distribution in any jurisdiction where this would be prohibited. While this information is believed to be reliable, it has not been independently verified by NatWest Group and NatWest Group makes no representations or warranties (express or implied) of any kind, with respect to the accuracy or completeness of this information, and accepts no responsibility or liability for any loss or damage arising in any way from the use made of or reliance on this information. Unless otherwise stated, opinions, forecasts or estimates are solely those of the author and not necessarily those of the directors or officers of NatWest Group, as of this date and are subject to change without notice.

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