Empowering Sustainable Investments with Environmental Intelligence: A Science and Data-backed solution to help the Banking sector Make Climate-Smart Investments in the Agrifood Sector

Access to finance has long been a challenge for the agriculture and food sector due to perceptions of low profitability and high risks. The most affected groups are small-scale farmers and small and medium enterprises (SMEs) from developing countries. Despite their estimated contribution of up to a third of the global food production, they only receive 1.7 percent of climate finance, and similar or if not much lower amounts of concessional capital, even as they are forced to cope with droughts, floods, cyclones, and other climate disasters.

More than ever, robust investments into agriculture and food sectors are needed to combat the devastating effects of climate change. To finance this transition, banks will have a key role to play, but they currently lack the necessary tools and data to properly assess the risk-return ratio and impact of their lending portfolios in food and agriculture. To respond to this challenge, the CGIAR Hub for Sustainable Finance (ImpactSF) has developed a unique AI-powered solution, the ImpactSF Analyzer, which is currently being piloted by banks in Southeast Asia and Africa.

ImpactSF Analyzer is a cutting-edge data-driven platform that provides environmental and crop productivity specific intelligence to assist financial institutions in making informed investment decisions and improving financial returns from the bank’s agriculture lending portfolio. The workshop aimed to collect user feedback on how to best address banks’ E&S data scarcity and receive feedback on the ImpactSF Analyzer specificities and user experience.

“We are facilitating the groundwork for a win-win situation for financial institutions to grow their investment in a previously shunned market while at the same time helping financing reach small businesses and individuals that need it the most to improve resilience and productivity.” Dr. Godefroy Grosjean, Co-Lead, CGIAR Hub for Sustainable Finance (ImpactSF)

ImpactSF Analyzer provides granular insights using powerful and predictive artificial intelligence to deliver precise, location-specific assessments and predictions on environmental, crop productivity related factors and identify emerging risks to help financial institutions quantify the potential environmental and social impact of their investments, align their lending portfolio with sustainability goals, and inform responsible investing strategies. APRACA is actively contributing to this process by integrating the ImpactSF Analyzer into routine banking processes.

“This workshop is part of our work to ferment strategic partnerships with scientific institutions such as CGIAR to help banks effectively assess operational risk, provide beneficiaries with advisory services, and catalyze new investments by financial institutions in Asia Pacific.” Dr. Prasun Kumar Das from APRACA