New report helps farmers focus on financing for a sustainable future

AgriFutures Australia has released a new Banking on Sustainability report on market dynamics driving sustainability focus across the Australian financial services sector, and how this may impact primary producers now and into the future.

With Australia’s agricultural sector producing 13 per cent of the nation’s greenhouse gas emissions, industry and supply chain participants are under increased pressure to both understand and reduce their impact and meet evolving market, regulation, and consumer expectations.

Achieving net zero in the future will require industry to measure and report on emissions against set baseline values.

AgriFutures Australia General Manager for Rural Futures, Michael Beer, said the report, which includes insights from Commonwealth Bank, NAB, Westpac and ANZ, seeks to help producers better understand current and future sustainability reporting requirements relating to sustainable lending products and what they need to do to meet the requirements of financial institutions offering these facilities.

“External drivers such as climate risk, access to capital, social licence to operate, investor demand and regulatory requirements have resulted in an increased focus on environmental, social and governance (ESG) issues across financial services,” Mr Beer said.

“ESG issues, such as climate change, are now becoming material risk factor for lenders.

“More than 95 per cent of Australian rural businesses are family owned, and access to finance is essential for acquiring new land, infrastructure and equipment.

“Insurance also provides critical support to primary producers by lowering the risk to their operations.”

Mr Beer said momentum in sustainable finance is continuing to grow.

“The emergence of products like green loans, sustainability loans and social loans incentivise the agricultural sector to implement activities that produce beneficial ESG outcomes.

“This report will help Australian producers understand their current reporting requirements, and what the financial sector may need them to achieve with regards to sustainability, social and welfare measures into the future.

“While the future of sustainable financing is still unknown, the study shows the rapid change to the way that businesses perceive and act on sustainability and anticipates how it will become a consideration for the financial sector.”

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