Implementing natural capital credit risk assessment in agricultural lending

Agriculture has critical impacts and dependencies on natural capital, and agriculturallenders are therefore exposed to natural capital credit risk through their loans tofarmers. Currently, however, lenders lack any detailed guidance for assessing naturalcapital credit risk in agriculture and are challenged by the fact that the relevant material risks vary considerably by agricultural sector and geography. This paper developsa natural capital credit risk assessment framework based on a bottom‐up review ofthe material risks associated with natural capital impacts and dependencies forAustralian beef production. It demonstrates that implementing natural capital creditrisk assessment is feasible in agricultural lending, using a combination of quantitativeand qualitative inputs. Implementation challenges include the complexity and interconnectedness of natural capital processes, data availability and cost, spatial data analytical capacity, and the need for transformational change, both within lendingorganisations and across the banking sector

The city never sleeps, but when will investment banks wake up to the climate crisis?

Using a global dataset of over 840,000 equity, bond and syndicated loan investment banking deals, we build the fossil fuel investment brokerage profile of financial centres worldwide between 2000 and 2018. We also study whether city-level fossil fuel divestment commitments and country level green banking policies impact the profile of fossil fuel financial centres over our study timeframe. We find that several financial centres shift their fossil fuel investment brokerage profiles substantially, including the asset classes which they are active in. However, we do not find any evidence that this is driven by city-level divestment commitments. We do find however that fossil fuel investment banking brokers situated in financial centres exposed to voluntary green banking policies reduce their fossil fuel financing. This is driven by foreign brokers whose behaviour signals an anticipation of forthcoming mandatory green finance policies