With the United Nations Climate Change Conference (COP28) taking place in Dubai, UAE, until 12 December, the European Association of Cooperative Banks (EACB) organised a webinar on 6 December to highlight how its sector can contribute to building sustainable food systems.
Food security has been a key topic at COP28, where more than 130 countries signed the COP28 UAE Declaration on Sustainable Agriculture, Resilient Food Systems, and Climate Action. The signatories pledge to scale up adaptation to reduce the vulnerability of farm businesses, promote food security and nutrition, strengthen the integrated management of water in agriculture and food systems, and maximise the climate and environmental benefits associated with agriculture and food systems.
During the summit, the director-general of the Food and Agriculture Organization of the United Nations (FAO), QU Dongyu, told heads of state and government that food security and climate change are interlinked and global agri-food systems are the climate solution.
The EACB brought together a diverse panel of co-operative bank representatives, advisors to the COP28 presidency, and experts from the farming and agri-business sectors to examine some of these issues. The panel debated the transition to sustainable food systems and the necessary finance framework to enable it, highlighting the actions undertaken by farmers, producers, co-operative banks and other stakeholders in the agricultural chain. They also addressed the challenges faced and explored possible solutions to steer agriculture toward greener systems.
Historically linked to the agricultural sector and often deeply rooted in rural communities, co-operative banks play a key role in financing a fair transition.
Joao Campari, global leader, food practice, WWF International, warned co-operative banks of the hidden costs of the food system, which are equivalent to 10% (US$12.7tn a year) of global GDP. He argued that banks must focus on managing their portfolios to assess risks related to these hidden costs and take them into account in financial decision-making.
He added that by being so close to producers co-op banks can take a big step towards incorporating these hidden costs into decision-making and working with clients to absorb them. In many cases, farmers cannot absorb these costs.
With regards to COP28, he said he regretted the lack of an agreement on climate action over food and added that “commitments are important but they need to be accompanied by demonstrable action”.
Successful examples, he added, include the AGRI3 Fund launched by UN Environment Program, with the Dutch government and financial co-op Rabobank as anchor investors. Under the scheme, the Dutch government and Rabobank each announced a contribution of US$40m. The funding supports agricultural loans that contribute to improving people’s livelihoods and in addition either protect forests and/or contribute to sustainable agriculture. Campari thinks that such initiatives show how the financial sector can place itself on the pathway to a climate-neutral future.
Berry Marttin, the president of the EACB, argued the hidden costs of the food system were, in fact, its true value. “As co-op banks, we need to support our clients and make sure we develop products that can help address this issue,” he said, adding that civil society could also play a key role in pushing for change.
Sanna Eriksson, head of investor relations, OP Financial Group, agreed, explaining that in Finland the challenges come from customers who want the change, and farmers need to follow sustainability criteria if they want to sell their products.
“As a co-op bank we are there to support our corporate customers in their journeys towards being more sustainable”, she said, explaining that OP offers energy efficiency loans to SMEs, including farms.
OP has set sector-specific emission reduction targets and is working with farmers to enable them to calculate their farms’ CO2 emissions and obtain data. Companies taking the lead from politicians can make a difference, she argued.
Kristal Golan, head of New Protein Solutions, BayWa AG, described how her organisation works with farmers in Germany and around the world to help them implement regenerative farming practices, improve efficiency and have high yields and support them in reducing food waste. She added that they embraced plant-based proteins in addition to, not exchanging animal-based proteins to contribute to feeding the world in a mode sustainable manner. She called for embracing technology and innovation to make the transition happen.
Kati Partanen, treasurer, Europe, World Farmer’s Organisation, highlighted that farmers may sometimes find it difficult to justify sustainability benefits. She argued that sometimes social sustainability investments might be bad business if calculating them with traditional methods. But, she warned, failure to invest in the resilience of agriculture would lead to a drop in global food security. She called for a bigger to be allocated towards agriculture, particularly small-scale farmers.
“Climate funding must involve farmers directly and enable farmers co-ops to be direct recipients,” she said, adding that farmers can contribute to the establishment of a new goal and the design of transparent reporting mechanisms.
“Co-op banks’ role is important because their roots are in the farming community,” she said.
WFO has they have members in both the global north and global south, said Partanen, and they are learning from each other. She argued that it is important to join forces to ensure financing and development for farmers in the global south. She added that structured farmers’ organisations, such as co-operatives, can bring solutions and tackle challenges. “They are reliable partners,” she said.
“It’s important to ensure there are viable food systems everywhere. We need agriculture and viable, local food systems in every country,” she added.
Richard Alaisdair Paton, climate change advisor, COP28 Presidency, pointed out that 5.7 billion people are covered under the UAE Declaration on Sustainable Agriculture, Resilient Food Systems, and Climate Action. Giving examples of recent initiatives, he mentioned the Gates Foundation’s recent Partnership with the UAE to accelerate action on climate and strengthen food systems through investment in agricultural innovation. The scheme will allocate US$200m in response to immediate and long-term threats to food security and nutrition caused by climate change.
Jean-Christophe Roubin, director of agriculture and agrifoods at co-op bank Crédit Agricole, agreed that banks can play a role in getting the data to define sustainable agriculture, but warned this is a big challenge which requires working with the agricultural sector, to ensure that farmers understand that the bank does not want to tell them what to do and how to produce but accompany them while they implement changes.
“Agriculture is part of the solution, not just a problem so we need to communicate this,” he said mentioning Crédit Agricole’s decision to invest in a carbon credits trading platform for farmers.
Summing up the discussion, Miguel García de Eulate, head of treasury and capital markets, Caja Rural de Navarra, highlighted the importance of investment, regulation and international co-operation to tackle global challenges.
“Competition is good and can bring many positives but we need to include a co-operative point of view and co-operation in general,” he added.
“The transition to a sustainable world is important to all of us,” concluded Nina Schindler, CEO of EACB.
