THE Australian Sustainable Financial Institute has launched a partnership with the Macdoch Foundation to bring together Australia’s agricultural producers and financial institutions to integrate natural capital considerations into financial and business decision-making using an evidence-based approach.

The Macdoch Foundation is the philanthropic organisation of Prue and Alasdair MacLeod – Mr Macleod recently addressed the Queensland Rural Press Club about his company, the Macdoch Group’s agricultural operations.

The new partnership delivers on the Australian Sustainable Finance Roadmap recommendations by integrating natural capital into decision-making of financial institutions and enabling tangible on-farm outcomes.

It emerged out of the recognition that the Australian financial system needs to build readiness for nature and climate-related risk and opportunity assessment, disclosure and reporting, and that to achieve this, they need to partner with primary producers to value the contribution natural capital makes for increased agricultural productivity, resilience and sustainability, both in the face of a changing climate and to meet key international market expectations.

The program will make use of the scientifically based research and analysis of real farm data from 130 Australian farms to:

• Explore and establish key natural capital indicators to determine their linkages with increased agricultural productivity and profitability, climate adaptation and resilience, nature risk dependencies, and carbon mitigation and carbon sequestration benefits.
• Identify and link the established natural indicators to key financial indicators to enable financial institutions and agricultural businesses to better understand risk and productivity, particularly the business’s economic stability, underlying profitability, resilience to climate-related and other shocks.
• Develop agriculture case studies and pilot integrated climate and nature risk assessment, disclosure and reporting using frameworks such as the TNFD and the Taskforce on Climate-Related Financial Disclosures (TCFD), which is expected to be mandatory in Australia from 1 July 2024.
• Identify and validate key natural capital indicators to determine accurate agricultural land valuations based on the productive capacity of the landscape.

ASFI CEO Kristy Graham said:

“ASFI members are deeply involved in the business of agriculture- banking, insuring and providing the capital to advance the work of our farmers. Like the communities they work with they know that without a productive natural environment, there are risks to the ability for agriculture to prosper and grow,” Ms Graham said.

“The Australian financial system needs to build readiness for nature-related risk and opportunity assessment, disclosure and reporting, and this needs to be underpinned by on-farm practices that will actually help farmers leverage their natural capital for increased productivity, resilience and sustainability in a changing climate and markets.”

 Macdoch Foundation CEO Michelle Gortan said:

“The aim of Farming for the Future is to quantify and make visible the contribution natural capital makes to production in economic terms. Working with the finance sector through ASFI is a critical next step in that work and will help advance our mission to ensure producers are supported to evolve their farm businesses build resilience and improve profitability, and that the partners like banks are there to support them.

 “Developing the financial indicators to align with natural capital indicators will make “investing” in nature in agriculture actually possible.  With the right information, skills and capabilities, producers, advisers and the sector as a whole will be better prepared to manage for climate change and provide the nature-related information increasingly being sought by third parties”

Source: Australian Sustainable Financial Institute