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Move towards ‘sustainable lending’ by banks

Banks have committed to helping agricultural businesses reduce their carbon footprint by offering new tools and lending schemes specifically for environmental projects.

Using audit tools was a useful place to start, according to Brian Richardson, UK head of agriculture at Clydesdale and Yorkshire Bank.

The tools allow farmers to test ‘what if’ scenarios, assessing how emissions can be reduced.

Mr Richardson said they allowed farmers to look at what could be achieved in the short- and mediumterm, including ‘quick wins’ and allowing businesses to begin planning how to make changes, such as cultivations, rotations and cropping.

He said: “It is important to note that these audits cannot be done in isolation.

They must be viewed as part of a whole farm plan, factoring in considerations of how the individual business can remain profitable, while also becoming more sustainable over the medium to longer term.” He said the bank had consistently supported farming and would continue to do so.

Mr Richardson said: “There is always the recognition that farming is a long-term business and loan products take account of that and are tailored to an individual farm’s specific needs.

“However, before these loans are approved, farmers must be proactive and have a clear plan of what they want to achieve, detailing what impacts they expect the new plans will have on their business.”


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Investments

 

He said they were still lending to farm businesses while generating their own understanding of how they can support green investments.

“I do believe the net zero agenda will help refocus farm operations as they also consider their business post-Brexit and the policy changes that will bring.” Lee Reeves, head of agriculture at Lloyds Bank, said they were committed to helping businesses reduce their environmental impact.

He said: “Farmers can access discounted lending through our Clean Growth Finance Initiative to support a broad range of investment in sustainable businesses.” This ranged from small improvements to large-scale renewable energy infrastructure.

Mr Reeves said: “We polled farmers across the UK on their sustainability plans earlier this year and found a tiny minority, just 1 per cent, currently use green finance solutions.

More than half report never having heard of green finance at all.” He said to encourage more farmers to utilise these options, they had lowered the minimum lending amount to £25,001 from £50,000.

He said: “We have also widened the breadth of what we will finance to include agritech solutions, soil health and peatland protection.” Mr Reeves said there was other support which may not have been considered, such as the bank’s partnership with the Woodland Trust to subsidise tree and hedgerow planting.

Ian Burrow, head of agriculture and energy at NatWest and Royal Bank of Scotland, said the banks had robust agriculture policies and had made ambitious commitments to tackle climate change.

Mr Burrow said: “These include undertaking sector-specific analysis to understand the climate impact of our lending and halving it by 2030.

“We continue to work closely with leading industry bodies in the sector and intend to do what is necessary to achieve alignment with the 2015 Paris Agreement.”

Visit the Net Zero home page

Visit the Net Zero home page

With a target of net zero carbon emissions by 2040, there is still a long way to go.

 

Visit the Net Zero home page to cut through the jargon and view our brand new showcase of some of the measures already having positive results on farms up and down the country.

 

Click here to go to the Net Zero home page

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