Position Paper September 2021
Financing Sustainable Agriculture in India
Opportunities, Challenges, and the Way Forward
In this report, we briefly chart the Agriculture, Forestry, and Land Use landscape in India and discuss how climate change is affecting agriculture.
Financing Sustainable Agriculture in IndiaRead the Full Report (PDF)
Climate change is one of the biggest challenges of our times, and the growth in investments according to environmental, social, and governance issues as well as climate change criteria attests to the growing recognition by investors to the possibility that capital can make a difference. Agriculture, however, is an area that has a significant impact on climate change, and a large gap exists between the intention of investors and the actions that are needed to make a difference. This report and the accompanying case studies are an effort to bridge that gap, raise awareness, and hopefully catalyse private capital to areas where it is most needed.
Call to Action:
- Develop a Taxonomy for Sustainable Agriculture
- Address Training and Capacity Needs of Stakeholders
- Provide State Government Support for Basic Research in Climate-Resilient Agriculture
- Leverage Data and Technology to Increase Formalisation of AgTech Sector
Challenges in Scaling Up Sustainable Agriculture
- It is difficult to put large amounts of capital to work because of the smaller nature of most operations.
- An appropriate framework is lacking to evaluate projects along the impact and financial dimensions in a consistent manner.
- Awareness is low among farmers around climate-resilient farm practices. It is not sufficient to answer the question how climate-resilient agriculture benefits the environment. How it benefits the farmer also is essential.
- Projects have long gestation periods, which make them risky. The assets (i.e., landholdings) are difficult to collateralise, which makes banks reluctant to lend.
- Central banks do not account for climate-related risks in the computation of risk weights. Because banks are the largest source of financing, the lack of distinction between the status quo and climate-resilient agriculture creates obstacles in scaling up the latter.
About the Author(s)
Sivananth Ramachandran (Siva) is the Director of Capital Markets Policy, India at the CFA Institute. In his role, he is responsible for advocating policy positions on issues that impact Indian capital markets, including corporate governance, ESG, and financial reporting, to name a few. Siva recently contributed as part of a SEBI working group that reviewed the related party transaction regulations. He is frequently quoted in media. Siva has nearly thirteen years of experience in financial services. Prior to joining the CFA Institute, Siva spent five years at Morningstar, and led their global index product development team. He also served as a spokesperson for sustainability at Morningstar India. Prior to his time at Morningstar, Siva spent nearly five years at MSCI where he co-authored research papers on small cap investing, portfolio construction, and economic exposure. Siva has an MBA from the Indian Institute of Management, Lucknow. He also holds the Chartered Financial Analyst (CFA) and Professional Risk Management (PRM) designations, and the Fundamentals of Sustainability Accounting (FSA) credential provided by Sustainability Accounting Standards Board (SASB).
Sandeep Bhattacharya is Climate Bonds Initiative’s India Project Manager. The present role is that of market development, which includes establishing and enhancing relationships with various stakeholders including banks and financial institutions, credit rating agencies, broking firms, consultancy firms, educational institutions, philanthropies, corporates and NGOs with the aim of linking environmentally friendly assets to the capital markets. Some notable assignments include: development of the Green Bond Market in Bangladesh, co-designing and executing training workshops in , support an impact FI with the first bond issuance in the distributed renewable energy sector, designing a roadmap for green bonds for Indian Municipalities and working to originate various transactions in India, Bangladesh , Nepal and Sri Lanka. Sandeep has provided information on these advocacy efforts through opinion pieces and articles in various Indian and international business newspapers and magazines, including the World Economic Forum.