Press and News 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  

The workshop was attended by top management staff members from the risk management, strategic development, and credit departments from APRACA member banks to share their experiences with peers in the ASEAN banking community. The ImpactSF and CGIAR team are capitalizing on engagements of this nature to customize the Analyzer tool to the context of the regional sustainable lending ecosystem and scale the use of these services.   

The workshop was actively supported by the Australian Centre for International Agriculture Research (ACIAR), the Foreign Commonwealth and Development Office of the UK, and the ASEAN secretariat to gain insights from bankers in the region to support ImpactSF and the CGIAR further structure their services and co-design data-driven solutions addressing the needs of the banking sector, specifically agriculture lending. 

The ASEAN-CGIAR Regional Program is contributing to sustainable development in the Southeast Asian region, particularly through its innovative approaches to agriculture and finance. ImpactSF Analyzer's comprehensive assessment system for smallholder farmers, developed in close interactions with end-users like the Landbank in the Philippines, has showcased its effectiveness in understanding the multifaceted aspects of lending to smallholder farmers. 

ImpactSF Analyzer is a data-driven suite of decision support tools that provides weather, climate and environmental risk assessments to support investors and financial institutions in environmental and Social (E&S) risk and impact assessment and reporting.  

The video below is a guide to CGIAR’s ImpactSF Analyzer