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Implementing natural capital credit risk assessment in agricultural lending
journal contribution
posted on 2023-05-20, 09:35 authored by Francisco Ascui, Cojoianu, TFAgriculture has critical impacts and dependencies on natural capital, and agricultural lenders are therefore exposed to natural capital credit risk through their loans to farmers. Currently, however, lenders lack any detailed guidance for assessing natural capital credit risk in agriculture and are challenged by the fact that the relevant material risks vary considerably by agricultural sector and geography. This paper develops a natural capital credit risk assessment framework based on a bottom‐up review of the material risks associated with natural capital impacts and dependencies for Australian beef production. It demonstrates that implementing natural capital credit risk assessment is feasible in agricultural lending, using a combination of quantitative and 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 lending organisations and across the banking sector.
History
Publication title
Business Strategy and the EnvironmentVolume
28Issue
6Pagination
1234-1249ISSN
0964-4733Department/School
TSBEPublisher
John Wiley & Sons Ltd.Place of publication
United KingdomRights statement
© 2019 John Wiley & Sons, Ltd and ERP EnvironmentRepository Status
- Restricted