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Rabobank last week was reported as saying that it would no longer lend to farms close to Natura 2000 environments.
“Given the [nitrogen pollution] problems, at the moment it is not possible to finance farmers who are based next to a nature reserve and who want to expand,” chair Wiebe Draijer was quoted as saying at the presentation of the company’s first-half figures last week.
The bank which has come under pressure from NGOs in the past year has declared its support for the Dutch climate agreement, which requires the agriculture and land use sector to cut greenhouse gas emissions by 6mt by 2030.
The bank has proposed setting up a €1bn investment fund to help realise Dutch climate, water and nitrogen targets for the countryside with a specific focus on land around Natura 2000 nature reserves.
Weak investment appetite among Dutch farmers
Rabobank confirmed to the Irish Farmers Journal that its door remains open for farmers but it’s not a one-size-fits-all approach.
“The government’s nitrogen plans evoke a lot of emotion among our customers – and rightly so. Our customers also ask us, as a bank, to be clear about where we will or will not provide financing. Due to a lack of clarity about what exactly the government’s plans mean for individual farms, it is impossible for us to give a single, unambiguous answer for all customers.
“Our guiding principle is that we continue to assess each financing application individually. The loans we provide must contribute to the future prospects and earning model of entrepreneurs and make their business more sustainable.”
Specifically, it notes that in the interests of both the entrepreneur and society, it will apply stricter criteria in the case of peak loads and activities near Natura 2000 areas.
Rabobank confirmed that the number of requests for expansion has fallen sharply since the announcement of the Dutch government’s plans to reduce nitrogen emissions. This is especially the case around Natura 2000 areas, which are nature areas protected by EU legislation.
“Many farmers are now thinking: is expansion smart? What do the government’s nitrogen plans mean for the future of my business? Of course, Rabobank is actively involved in helping farmers make strategic choices.”
In January, Friends of the Earth Netherlands wrote to 30 Dutch corporations, including FrieslandCampina and Rabobank, seeking details of their plans to meet 2030 climate targets including reducing emissions by 45% by 2030.
This follows the landmark legal action against Royal Dutch Shell in which the court ruled it must reduce its environmental footprint.
The plans were evaluated by an international organisation New Climate Institute which found that the companies are falling seriously short when it comes to their climate plans.
According to the assessment of eight financial institutions, it found that the emissions associated with their investments are, on average, 700 times larger than the emissions associated with their offices. It called on financial institutions to stop doing business with companies that continue to cause dangerous climate change.
Friends of the Earth noted that it is starting a preliminary legal investigation, while continuing to engage with the companies.
Separately, World Wildlife Fund (WWF) wrote an open letter to Rabobank in July calling on it as the largest financer of Dutch agricultural companies to come up with concrete proposals to make the agriculture transition a success for biodiversity, the environment, climate and farmers.
According to the WWF, the public investment of €32bn in agricultural transition can only be legitimised if the private sector, and therefore also Rabobank, takes responsibility to contribute to this urgent and necessary transition of agriculture.
The letter was particularly significant given that WWF and Rabobank have been working together for more than a decade to demonstrate how the switch to nature-friendly food chains is possible.
WWF’s letter was critical of end-of-pipe solutions such as devices that claim to reduce ammonia emissions which they say is not a solution for all other challenges that are now equally urgent and necessary.
Pilot project
It is thought that this refers to a pilot project by Lely, FrieslandCampina and Rabobank aimed at cutting nitrogen emissions on dairy farms.
It warned that investments in these type of solutions will turn into stranded assets.
The Dutch experience, which is not unique, is a sage lesson for the Irish agri-food sector. Ireland must get policy right first time to avoid a Dutch-type scenario.
It needs to be balanced and fair, ensuring multiple priorities are met and environmental and economic sustainability are balanced.
It needs to be clear, targeted and fully funded, ensuring that results are achievable.
We cannot arrive at a Dutch situation in a number of years to come where farmers, banks and even processors are questioning what they can and can’t do.
While Irish targets are set, roadmaps are not clearly defined, budget has not been allocated, climate justice has not featured and yet the clock is ticking.
Increasingly, agribusiness and corporates along the food chain will drive change at farm level. Consumers and investors are demanding they act in responsible manner with regard to climate and the environment.
Delivering against the current emissions ceiling may not be the greatest challenge that the sector faces over the next decade
Large corporate entities such as Glanbia, Kerry Group and Danone will soon be required to report the proportion of their turnover derived from sustainable activities and proportion of investment and operational costs associated with sustainable activities under EU law. This is likely to reach more entities in the years ahead.
Ultimately, investors will seek those businesses that are most sustainable. The influence of the corporates that buy Irish food, finance Irish food and ensure Irish food is likely to get stronger as a result.
There is also a very real threat of legal action, of which Irish dairy processing has had an initial taste. At best, it can be highly disruptive, in the case of An Taisce’s case against Glanbia. But, at worst, it may damage the capacity of business and sectors to operate and to effect change in a planned manner.
Potentially, it can destroy reputations.
The Dutch experience reflected here and in relation to Dutch Crown should serve as a warning.
Ireland cannot afford to adopt a good-intentions approach to reducing emissions which is slow or fails to deliver.
Delivering against the current emissions ceiling may not be the greatest challenge that the sector faces over the next decade.
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