CASE STUDY: Standard Chartered
‘Insuring Business through Increasing Yields’
Relevant Principle: 2.5 Corporate Banking
Opportunity
Agriculture is responsible for xx% of global CO2 emissions. Additionally agriculture in the developing world is increasingly vulnerable to the impact of climate change. There is therefore a challenge for financial institutions to simultaneously encourage farming practices which reduce agriculture’s impact on climate change and provide protection against climate risks. Traditionally, African farmers have struggled to obtain finance as conventional lending practices ask for bonds over farmland, which is not generally available. As a result, farmers are unable to obtain high-quality fertilisers, seeds, and pesticides, leading to diminishing crop yields.
Action
Standard Chartered has developed an innovative ‘Input Financing’ solution which addresses this issue by using a farmer’s crop (soya, corn, wheat, etc.) as collateral rather than fixed assets. Standard Chartered’s Contract Managers also provide hands-on precision farming and agronomic expertise on topics such as fertiliser application, tillage practices and crop rotation to help farmers increase the quality and quantity of their crops while also promoting best practice water and soil preservation.
Impact
The benefits to this approach include:
- The conversion to no-tillage farming which exponentially decreases the use of diesel and related carbon emissions for land preparation.
- Another key aspect of the Input Financing solution is the provision of multi-peril insurance which reduces the farmer’s exposure to potentially devastating climate and disease risks, thereby ensuring his survival on the land in times of drought, floods or related perils.