December 27, 2022

 

Climate Bonds commences work on Agri-Food transitions Criteria Development

 

 

 

International organisation Climate Bonds Initiative has kicked off the Agri-Food transitions Criteria Development, and the proposed crop and livestock criteria will build upon existing Agriculture Criteria, which can already be used to certify assets and activities.

 

The updated criteria will include expanded scope allowing for the certification of entities and Sustainability Linked Bonds (SLBs) in the crop and livestock production sectors. The process will result in the development of two sets of sector criteria.

 

This early stage of criteria development involves the consultation of technical and industry experts in these sub-sectors. These experts, through Technical and Industry Working Groups (TWGs and IWGs), will ultimately determine the form and relevance of the criteria.

 

The first set of  Agriculture Transition Criteria will define and evaluate crop and livestock production companies by encompassing various components, including climate mitigation, climate adaptation and resilience, land use change, biodiversity, water use and quality, food loss and waste, circularity and just transition.

 

The criteria aims to address the climate and environmental impacts of crop and livestock production. This is part of a wider programme to address the transition in agri-food systems, which will also develop standards for commodity procurement strategies and other key elements of the value chain.

 

Protected agriculture is out of scope for the present criteria, as are forestry and biofuel crops.

 

According to Climate Bonds, Agri-food systems are responsible for 31% of global anthropogenic greenhouse gas (GHG) emissions. At the same time, it accounts for 70% of all water withdrawals and is the main driver of global biodiversity loss. 

 

Meanwhile, it is projected that the global population will increase to 10 billion by 2050, resulting in a 50% increase in food demand, with global grain demand projected to double. Food security will have to be secured through climate adaptation of the sector, not only through improving current practices, Climate Bonds stated. Yet, this must not be detrimental to other environmental goals such as climate and biodiversity.

 

There is a growing consensus that the agri-food sector must become climate and nature positive to align with net zero fully. This means first finding a shared understanding of what a 1.5oC-aligned climate transition looks like for agriculture. Additionally, other agri-food system goals such as land use change, biodiversity, water use, quality, circular economy and transition must be safeguarded.

 

For this, green definitions are needed to facilitate financial flows to companies that genuinely contribute to transition in the sector, which is where the criteria come in. It means encouraging sustainable farming practices, improving soil carbon and maintaining productivity with less inorganic fertilisers, particularly tackling commodities that are responsible for high emissions.

 

Climate adaptation will be needed through more resilient breeds, climate warning systems and social safeguards. Natural land conversion, including deforestation, must also be eliminated for agriculture. Agriculture must increase and protect biodiversity rather than decrease it, Climate Bonds highlighted.

 

To develop the criteria, Climate Bonds is establishing an Agriculture Technical Working Group (TWG) of international experts drawn from universities, multilateral-development banks and consultancies. The Agriculture Industry Working Group (IWG) – comprised of agriculture industry stakeholders, investors and verifiers – is also being convened. It will provide feedback on usability throughout the process.

 

The current agricultural transition criteria development represents a significant expansion of the existing criteria. Climate Bonds are therefore seeking new members for each Working Group. Voluntary participation in these groups provides an excellent opportunity to drive change in the financial market, which is crucial if the sector is to transition successfully.

 

The Climate Bonds team will lead the criteria development process, working closely with a technical lead consultant.

 

- Climate Bonds