365-1 Natural Capital Credit Risk Assessment in Agricultural Lending

Summary

This report builds on previous work by presenting an in-depth approach to natural capital and credit risk in agriculture. This framework has been developed on the knowledge that agri- cultural enterprises have significant impacts and dependencies on natural capital, leading to risks (and opportunities) which are unlikely to have been fully evaluated by lenders in the past, leading to sub-optimal allocation of capital in current credit risk assessment processes. Evaluating these natural capital risks (and/or opportunities) would allow improved allocation of capital, with more flowing towards enterprises with better management of natural capital impacts and dependencies, resulting in enhanced financial outcomes for the lender, and greater value for society as a whole.

Thumbnail image for This report builds on previous work by presenting an in-depth approach to natural capital and credit risk in agriculture. This framework has been developed on the knowledge that agri- cultural enterprises have significant impacts and dependencies on natural capital, leading to risks (and opportunities) which are unlikely to have been fully evaluated by lenders in the past, leading to sub-optimal allocation of capital in current credit risk assessment processes. Evaluating these natural capital risks (and/or opportunities) would allow improved allocation of capital, with more flowing towards enterprises with better management of natural capital impacts and dependencies, resulting in enhanced financial outcomes for the lender, and greater value for society as a whole.

Issuer

Natural Capital Finance Alliance (NCFA)

Year

2019

Region

International

Issuer (type)

Natural Capital Finance Alliance (International)

Policy Type

Other sustainability policy

Geographical scope

International

Mandatory or voluntary

Voluntary

Main industries targeted

Agriculture, Forestry, Fishing & Hunting
Finance & Insurance
Mining, Quarrying, Oil & Gas Extraction
Education

Restrictiveness

Very Low

Sustainable Development Goals (SDGs)

SDG 2: Zero Hunger
SDG 3: Good Health and Well-being
SDG 6: Clean Water and Sanitation
SDG 7: Affordable and Clean Energy
SDG 8: Decent Work and Economic Growth
SDG 13: Climate Action
SDG 15: Life on Land