In October last year, the Agriculture, Forestry and Other Land Use (AFOLU) Technical Working Group was set up to develop eligibility criteria for climate bonds linked to these sectors that can be certified under the Climate Bonds Standard.
Early last month, the second arm of the Standard development for AFOLU was launched with the first meeting of the AFOLU Industry Working Group charged with ensuring that proposals developed by the Technical Working Group are practical, easy to use and applicable across a number of key investments areas under the sector.
The IWG includes representatives from Credit Suisse, World Bank, Inter-American Development Bank, Rabobank, Banorte , ADM (one of world’s largest agricultural processors and food ingredient providers), Hassad Food Company, Olam (one of the world´s largest agriculture businesses operating from seed to shelf in 65 countries), Hancock Natural Resource Group (one of the world's largest asset managers of forestry and agriculture investments), The Nature Conservancy (TNC) and many more.
The strong representation from banks, agriculture & forestry asset managers as well as agriculture production & processing companies ensures wide industry backing for the Standard.
"We believe this initiative can help catalyse the investment that's going to be needed. As a global bank focussed on food & agri, we understand the need for more climate change action in food and agriculture, we see the options to improve outcomes and we hear from investors about their interest in this area," said Hans Biemans, Head of Sustainability -Global Financial Markets at Rabobank.
Estimates vary widely for the additional investment and financial flows needed to cope with the adverse impacts of climate change in the Agriculture, Food and Forestry sectors. The UNFCCC has estimated that globally, about USD 14 billion will be required in 2030 - slightly more than half of this will be needed for developing countries alone. Other estimates suggest that between USD 7 billion and 7.6 billion are required per year for adaptation measures.
Sean Kidney, CEO of the Climate Bonds Initiative said: "The end-goal of this initiative is to catalyze increased investment, by both private and public bodies, in mitigation, adaptation and resilience interventions in Agriculture and Forestry. Looking for ways of doing that in a commercially viable way that will support bond issuance is one of the things we’d like to tackle through this particular committee."
Working group lead expert Tanja Havemann said: "The purpose of this group is to explore the opportunities around the AFOLU Sector for bond issuance. We need to explore where the industry sees the priorities and what sectors might be most interested in terms of potential bond issuance."
Chris Brown from Olam said: "We’re definitely interested to see how this can be turned from an idea into reality and to explore which areas of the business it could add value for." Tim McGavin from Laguna Bay added: ‘The farmers in Australia get the environmental challenges but most of them don’t have resources to invest in technology – so there is a huge potential application here’.
Esben Brandi from Quantum Global Alternative shared his thoughts by saying: ‘Climate bonds are an opportunity that could be very relevant for the African perspective’. We also heard from Cristiano Oliveira from Fibria: ‘We are very interested in what the financial mechanisms could look like when sustainability aspects are taken into account.´
The Climate Bonds Standard for Agriculture & Forestry is being developed on the back of strong investor interest in sustainable investments of which evidence came during the UN Climate Summit where investors managing $24 trillion of assets came together and called on governments to quickly address climate change.
John Tobin, Global Head of Sustainability at Credit Suisse commenting on the bank’s involvement in the AFOLU Standard development said: ‘Focusing on sustainability does not mean looking only at risks but also opportunities. More and more, we’re finding ourselves on the opportunity side of things and green bonds, climate & environmental bonds are of particular interest to us. So when the opportunity to support the development of the AFOLU Standard development came round we were delighted and look forward to making a meaningful contribution for the sector and business.’
Members of the Industry Working Group:
- Ali bin Mohamed, Hassad Food Company
- Brian Kernohan, Director of Policy & Environmental Advocacy, Hancock Natural Resource Group
- Chris Brown, General Manager for Environmental Sustainability, Olam
- Cristiano Oliveira, Sustainability Consultant, Fibria
- Esben Brandi, Head of Timberland, Quantum Global
- Fabian Huwyler, Vice President, Sustainability Affairs, Credit Suisse
- Hans Biemans, Head Sustainability, Markets, Rabobank
- Jason Green, ECOM
- John Simpson, Vice President, Duxton Asset Management
- John Tobin, Global Head of Sustainability, Credit Suisse
- Justin Sherrard, Global Stretegist, Rabobank
- Karla Carnavan, Commercial Director, Bunge
- Katalin Solymosi, Sustainable Land Use Associate, Inter-American Development Bank (IADB)
- Lara Yacob, Director of Corporate Engagement, TNC
- Mads Asprem, CEO, Green Resources
- Marc Sadler, Adviser, Agricultural Risk and Markets, Agriculture Global Practice, World Bank
- Marcos Mancini, Director, Sustainable Banking, Banorte
- Michiel Hendriksz, Director of Sustainability, ADM
- Olli Haltia, Dasos
- Robert-Carl van Koppen, Director, Form Valuations
- Tim McGavin, CEO, Laguna Bay
- Timm Tennigkeit, Managing Director, UNIQUE Forestry and land use