Farmers concerned about climate change and natural capital, RBS research reveals

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Farmers concerned about climate change and natural capital, RBS research reveals

Nearly two thirds of UK farmers say climate change is already having an impact on their business, according to research by RBS.

Economic Analysis

21 November 2013

The 59% who expressed concern about the effects of climate change singled out drought, extreme temperatures and extended seasons as their three main threats.

World Forum on Natural Capital

The research, which aims to identify farmers’ perceptions about climate change and natural capital, and how they see the role of banks, was presented at the World Forum on Natural Capital. The UN-backed conference, which took place in Scotland on 21 and 22 November brought together business and sustainability leaders to discuss how to identify and measure the economic value of natural capital.

Over half of farmers said that their business now faced a threat from drought, extreme temperatures and extended seasons as a result of climate change, while 40% said natural capital - the world’s natural resources such as water, forests and agricultural land -is critically important.

Four out of every  five  farmers questioned for the survey said banks should have a role in helping farmers invest in projects to protect natural capital, with 73% saying that lending for projects or greater flexibility with repayments and access to funds would be most helpful.

Non-financial risks

Speaking at the conference, Sir Philip Hampton, Chairman of RBS Group (pictured), stated that natural capital accounting would enable banks to work out the impact of economic activity, in particular lending, on nature and society. He also acknowledged the criticism banks face for lending to companies whose business activities damage the environment.

Commenting on the changing stance of RBS towards lending policy, he said: “We’re also now doing much more to assess the non-financial risks that exist in the sectors we lend to. By looking at environmental and social impacts of those sectors, we can get a much more accurate picture of how well prepared prospective clients are for mitigating those risks, and build that into our lending decision-making process.

“Indeed, at RBS, we have a range of policies which set out criteria on how we lend into some of the more sensitive sectors like Oil & Gas, Mining and Metals, Forestry, Power Generation and Defence.  They ensure we give specific consideration to things like emissions levels, water supply issues, waste handling and so on.”

Sir Philip said  the transition of society to a more sustainable future would require huge amounts of capital, which banks would need to support:

“Feeding the 9 billion people we expect to populate the world by 2050, while ensuring sustainable land use and a carbon sensitive energy supply, will be an enormous challenge at many levels. It will also cost a lot. Banks and the wider financial services sector have a huge role to play in getting the finance in place for that,” he said.

Jonathan Hughes, World Forum Programme Director, said: “Farmers are on the frontline when it comes to climate change so it’s very telling that so many of them say that climate change is already affecting their business.”

“It’s encouraging to see that many farmers associate improvements in their natural capital with financial benefits. The reality is that investing in simple measures to enhance nature in and around the farm can improve resilience in the face of increasing unpredictability in weather and climate, and ultimately improve profitability, as many farmers recognise.

"The natural world is our life support system and recognising its value to our economy and our well-being is a crucial first step in protecting and restoring it. Soaring food prices are just one example of the negative consequences of failing to invest in Natural Capital. It is in everyone's interests to work together to address the serious threats posed by the depletion of our natural capital and this is what the World Forum is all about."

The World Forum on Natural Capital is organised by the Scottish Wildlife Trust in association with the UN Environment Programme, World Business Council for Sustainable Development, International Union for Conservation of Nature, TEEB for Business Coalition and The Wildlife Trusts.

RBS Group is the headline sponsor of the World Forum on Natural Capital.

* The research consisted of a survey of 201 UK farmers.

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