A series of carbon-focused seminars run by Rabobank across New Zealand have gained strong interest from farmers tuning in to the opportunities an emerging but complex market can offer them.
Blake Holgate, Rabobank’s head of sustainable business development, said amid the debate and discussion over New Zealand’s zero-carbon direction, a growing number of farmers are now aware there are opportunities to generate a new income stream from the carbon market.
“It is a complex space and there is a real need to be aware of the risks that lie within the opportunities. There has been a sense you have to sell the entire farm and see it go into pine trees to get any benefit from it, but this is certainly not the case,” he said.
Rabobank has teamed up with forest advisory company Forest Management Group to focus on educating groups of 10-12 farmers on the ins and outs of the market and forestry options.
“Our intention is to keep running these for as long as there is interest, which has not dropped off yet,” Holgate said.
The complexity of the carbon market means the smaller groups are more suited to the subject’s forum.
“People are not coming to learn how to sell their farm. It is a market that sees a lot of changes in regulations and standards, making any investment on any scale in need of good advice.”
Dave Janett of Forest Management Group said he has presented at almost 20 seminars to date, and the response from farmers has been overwhelmingly positive.
“People are interested in carbon and forestry and want to know the facts behind it. We cover all aspects including native forest sequestration, ETS [the Emissions Trading Scheme] and how it works, land eligibility, and include some examples of how averaging carbon flows and cashflows works.
“We are not trying to talk people into planting trees, it is just showing what you can do and consider for your particular farm business and plans, including succession, providing the knowledge to help them make those decisions.”
The advice comes as Rabobank responds to climate change initiatives being driven by both societal expectations and demands from the European Central Bank. It is increasingly requiring European Union-based banks to address issues of sustainability and climate change exposure.
Banks are required to run climate risk maps to highlight areas of greatest climate change exposure within their lending portfolios.
In addition, most European banks, including Rabobank, have committed to reaching net carbon zero for their Scope 3 emissions by 2050. This requires any non-bank-owned parties to also meet the banks’ goals of net carbon zero.
Regulators are also more focused on climate risk in banks’ portfolios, conscious of the need to avoid those financers ending up with stranded assets that are not protected by sufficient capital backing.
Ultimately in coming years there is a growing expectation that climate change risk will be factored into banks’ lending decisions, with a proportionately higher cost of capital charged for those at greater risk. The inability of a business to provide carbon emission data could ultimately result in an inability to lend on that business’s venture.
Holgate said there is a high level of discourse around NZ’s moves to a zero-carbon food system, though it is important not to lose sight of the bigger picture.
“But it is still okay not to have concrete clarity on how the policies play out, that it is quite likely to evolve over time.
“The reporting requirements for all parties are still evolving and we are very much still at the awareness stage.
“Our job is to try in helping clients understand their businesses better, and where best to invest to make the farm business more resilient, and therefore more capable of adapting going into the future.”
