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Sustainable finance ploughing back into the agri sector

Updated: Feb 21, 2022

If it’s possible to extract any silver lining from the recent clouds that have descended on Australia in the form of horrific bushfires and destructive storms, it’s this: there is a renewed and heightened focus on climate change mitigation and long-term sustainability. One of the most effective weapons in our economic arsenal during this time is sustainable finance.

A World Bank discussion paper, Making Climate Finance Work in Agriculture, looks at innovative ways to improve access to finance for small to medium-sized enterprises (SMEs) in the agricultural sector, while delivering positive climate outcomes in the form of increased resilience, sustainable land use and reduced emissions.

Agricultural SMEs in Australia are in a prime position to benefit from sustainable finance. They are surrounded by the impacts on the land of our changing climate and are generally located in areas with a greater exposure to the potential of bushfire destruction. At the same time they have available to them an array of sustainable agriculture products and the means of financing them.

Sustainable finance benefits

Sustainable finance benefits agricultural SMEs in several ways:

  • More favourable finance terms, with the lender demonstrating sustainability credentials in its lending portfolio. The lender may perceive sustainable businesses as less risky. The Clean Energy Finance Corporation (CEFC) is working with a variety of Australian lenders to offer discounted rates for clean energy technologies that change energy use, cut energy use and reduce emissions.

  • Energy and labour cost savings from more efficient machinery

  • Operating benefits from the sustainable agriculture assets being financed including improved agricultural practices, better resource management and increased productivity

  • Build a better reputation as a result of making a recognisable contribution to a low-carbon economy

Agricultural equipment and projects that could be candidates for sustainable financing

Here are just a few examples of equipment and projects that could qualify for sustainable financing: 

  • Clean energy tractors fuelled by hydrogen, methane or bio-diesel

  • Agricultural management software and computer equipment for managing livestock, crops and the farm business

  • New fencing and water systems for controlled grazing

  • Renewable energy systems such as solar panels, small-scale wind turbines, hydro-electric and bio-energy projects for on-farm energy needs and possible revenue source

  • Replacement or upgrading of old machinery with more functional and energy-efficient modern equipment

  • Advanced agricultural technology equipment such as drones, moisture sensors, wearable sensors for livestock, sensors for irrigation, water troughs and feeders, GPS terrain mapping, autonomously-driven tractors and robotics

The CEFC has a long list of practical suggestions on the type of expenditure that would qualify for clean energy finance.

Find out more from your finance broker

We can guide you through all the benefits and possibilities of sustainable finance. Contact us today to discover how it can help your agribusiness.

Original post by Bank of Queensland



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