The Finagri Project

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2015 and the start of a new era for Sustainability

  • The results of the Millennium Goals (MDGs) and the period 2000-2015 are generally positive, and three lessons are learned for the period 2015-2030: 

    • A need for better data, measurements, and monitoring

    • A need to integrate more factors

    • A need to focus on funding the goals

  • Adoption of the 2030 Agenda for Sustainable Development and the Sustainable Development Goals (SDGs)

    • 8 MDGs (including one environmental objective) have been transformed into 17 SDGs (including 7 environmental objectives)

  • Adoption of the Paris Climate Agreement at COP21

    • Global Investor Statement on Climate Change signed by 409 investors with $24 trillion of assets under management

 Financial innovation for the climate

  • First Green Bond issuance in 2007: 

    • Reaches $10 billion milestone in 2013, $100 billion milestone in 2017 (CBI, 2018)

    • Traditional bond market stands at $100 trillion

    • Next wave is starting: Green Securitized Bonds, Sustainability Bonds, SDG Bonds

  • Sustainable and Responsible Investing in full expansion 

    • From $23 to $30 trillion between 2016 and 2018 (GSIA, 2018)

  • Impact Investing/Community Investing and Sustainability Themed Investing

    • Small markets with huge growth (+79% and +269% between 2016 and 2018 respectively)

  • Green & Sustainable Loans

    • Green Loans following the Green Loan Principles, and Sustainability/ESG Loans have emerged in early 2017 and the market has already been evaluated at $32 billion (compared to the $170  billion Green Bond Market) (Environmental Finance, 2019)

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European agricultural sector in need of funding

  • Investment gap in European Agriculture (excluding necessary investments in sustainability-related issues)

    • France 

      • Short-term loans :                         40 - 188M

      • Medium and Long-term loans :  148 - 695M

    • EU 28

      • Short-term loans :                         1,565 - 4,120M

      • Medium and Long-term loans:    5,499 - 14,478M

  • Environmental Impact of Agriculture

    • In Europe, agriculture represents 10% of total GHG Emissions, not taking into account emissions related to transportation, fuel, and industrial processes for agricultural products

    • Globally, the AFOLU (Agriculture, Forestry and Other Land Use) represented 24% of emissions in 2014, the amount of emissions has grown by 8% yearly since 2005

    • In Europe, the AFOLU sector represents 11% of Sustainability Themed Investments, which represent 1% of total SRI Investments.

The Growing Need for Capital Market Involvement

  • The need for private investment to supplement public subsidies

    • The need for investments in the Agricultural Sector cannot be met in its entirety by public entities

    • Public policy regarding the financing of European Agriculture, particularly the Common Agricultural Policy, is increasingly exigent regarding the granting of subsidies in the context of a lowering budget

  • Growing regulatory constraints for banks

    • This is also the case for private financing via banking institutions in the face of regulatory current constraints on their leverage ratios as well as capital and liquidity requirements Basel III and expectations regarding Basel IV

    • This is, even more, the case for the financially risky agricultural industry

  • Europe looking at financial markets for solutions 

    • Single Market and Capital Markets Union for a deeper, more integrated market to lower costs and make the market more resilient

    • The Junker Plan for stimulating private investments via public-private partnerships

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Environmental impact analysis for sustainable agriculture

  • Finagri works closely with INRA in order to define the best possible methodology to identify, assess, control and report on the environmental impact of the Finagri sustainable obligation

  • INRA has listed 200 distinct agricultural practices, each with at least one type of positive impact on the environmental performance of farms

  • 6 impact levels: negative, negative to neutral, neutral, neutral to positive, positive, undetermined

  • The material necessary for each practice has been documented, and a distinction has been made between the different practices, which has made it possible to determine whether a practice can be carried out with a piece of single equipment or more, if it can be carried out with different equipment, and if a piece of equipment can allow several practices to be carried out

  • 20 different categories of environmental performance divided into 8 groups.