Combatting this world’s climate crisis is not only the job of the big organizations, it is the job of all of us. Recently, an increasing number of private companies are driven by sustainable finance and they are remaking their strategies so that these can meet the sustainability goals presented by the UN.
Green finance is any structured financial activity that’s been created to ensure a better environmental outcome. It doesn’t mean that the companies have to create new financial plans, it means that they have to adapt the ones they have so that they meet goals like lower carbon emissions, circular economy promotion, usage of energy-efficient technologies, responsible waste management…
These adjustments mean the disbursement of pretty large quantities, but it is a long-term investment that will most certainly pay off and will make the planet a better place. In fact, it will describe the production and consumption patterns of the future.
The agricultural sector is becoming more and more attractive for investment funds.There are different types of bonds granted to companies to develop sustainable projects, such as Sustainable Bonds or Sustainability-related bonds. Today we are going to give an overview about green bonds, since they are related to projects aimed to have positive environmental impacts:
Green bonds are funds issued by public or private organizations that support sustainable projects of companies. Therefore, if your company is planning to meet the Sustainable Development Goals (SDG) by the UN, these can be the push you need.
If you want to apply for a Green Bond, your agricultural company needs to present a project related to any of these fields:
- renewable energy
- circular economy adapted products, production technologies and processes.
- clean transportation
- responsible waste management
Also, these funds are controlled in a way that the issuers, as well as external auditors, receive updates on how the funds are being used and the environmental benefits obtained thanks to them.
Importance of green finance in the agricultural sectorWhat is the foundation of human beings? Food. And which are the activities that give humans access to food? Agriculture and livestock farming.
If we do not take care of the environment in which we live, agriculture and livestock practices will come to an end, altogether with society. Therefore, the key for the existence of society is in the hands of the Agribusiness sector.
If Agribusiness companies manage to develop their activities in an environmentally responsible way, life will be preserved.
Thanks to sustainable finance, companies can perform good practices and achieve produce of the highest quality without losing a cent. If we work hard and look for the most effective and efficient way in which we can adapt our financial strategy, the earnings of the company will not be affected at all and we will be contributing to a bigger cause than us: avoiding the consequences of climate change.
If your company is not “green” the environmental risk premium that you will have to pay to investors would be higher than the one of those that are.
In the Module Finance and Accounting in the Agribusiness World of the Master in International Agribusiness Management you will learn how to apply green finance to your company and make the most of it. Click this link to have a look.
UN Environment Program. Green Financing: https://www.unep.org/regions/asia-and-pacific/regional-initiatives/supporting-resource-efficiency/green-financing
World Economic Forum. What is Green Finance and why is it important?: https://www.weforum.org/agenda/2020/11/what-is-green-finance/
European Commission. What is sustainable finance? https://ec.europa.eu/info/business-economy-euro/banking-and-finance/sustainable-finance/overview-sustainable-finance_en
Iberdrola. What are green bond and what are they for?https://www.iberdrola.com/sustainability/investments-green-bonds
International Capital Market Association. The Green Bond Principles: https://www.icmagroup.org/assets/documents/Sustainable-finance/2021-updates/Green-Bond-Principles-June-2021-140621.pdf