FRIENDS Consult Contribution Green to aBi Finance’s Green Financing Initiatives
The Master Green Agribusiness Loan Product (MGALP)
Green finance is a crucial mechanism for mobilizing capital to combat climate change and promote a sustainable future for our planet. This article summarizes the tenets of a Master Green Agribusiness Loan Product (MGALP) sponsored by aBi Finance Ltd (and developed by FRIENDS Consult under aBi Finance Contract), for Partner Financial Institutions (PFIs). The article also summarizes practical advantages of green finance.
The MGALP is designed to be simple, easy to understand and implement. It highlights eligible agribusiness sectors, sub-sectors, activities, product features of Green Finance products, and an exclusion list to guide assessment and embedding of “greenness” in financial offerings. The MGALP also lays out the guiding process for delivering Green Agribusiness Finance loans.
To green a financial product, the features and delivery channels have to be refined so as to reduce adverse climate impact, enhance positive climate impact or improve resilience to inevitable climate change.
Benefits of Green Finance products guided by the MGALP
- Environment: Through green financial products, you support projects that reduce pollution, improve climate adaptation, and promote a more sustainable future[1]
- Financial returns: Green finance products are not just for the eco-conscious, but also offer competitive returns on investment alongside the environmental benefits[2]
- Reduced investment risk: As environmental regulations tighten and the focus on sustainability grows, businesses with high carbon footprints face financial risks induced by regulation, and green investments can reduce these risks[3]
- Support to green economy: Green finance products channel funds towards renewable energy, clean technology, and other environmentally friendly sectors, fuelling growth of these businesses and creating new green jobs[4]
- Alignment with values: If you care about the environment, green finance products allow you to align your investments with your values in contributing to positive environmental impact.[5]
Overall, green finance products afford a positive difference for the planet while making sound financial decisions and enhancing both financial and social returns.
Promoting the green finance agenda
In popularising green finance, banks need to creatively reach the right people through:
- Targeted outreach: Ilike posters in local languages explaining green loans at trade fairs frequented by farmers, local radio ads/ jingles, and guided community word-of mouth
- Digital buzz: Social media posts, website info, and SMS can reach a wide audience quickly
- Face-to-face interactions: Bank staff can personally explain the benefits of green loans, helping businesses to choose sustainable growth
- Government green teaming: Financial institutions can work with governments to promote green finance, making it a win-win for everyone.
Financial institutions need to track green loans to make sure they remain green. This means having clear, effective procedures for checking and reporting on how green these loans are and how green the recipients remain. These procures should consider good guidelines like the aBi Green Taxonomy.
Dr. Keren Obara.
Digital Marketing Associate.
[1] ([https://www.persefoni.com/financial-services/financed-emissions-accounting-analytics](https://www.persefoni.com/financial-services/financed-emissions-accounting-analytics)).
[2] ([https://vasscompany.com/en/about-us/esg/](https://vasscompany.com/en/about-us/esg/)).
[3] ([https://www.persefoni.com/financial-services/financed-emissions-accounting-analytics](https://www.persefoni.com/financial-services/financed-emissions-accounting-analytics)).
[4] ([https://www.persefoni.com/financial-services/financed-emissions-accounting-analytics](https://www.persefoni.com/financial-services/financed-emissions-accounting-analytics)).
[5] https://www.weforum.org/agenda/2020/11/what-is-green-finance/](https://www.weforum.org/agenda/2020/11/what-is-green-finance/)