Bank of Ireland Favours Sustainability in Farming

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by KnowESG
KnowESG_Bank of Ireland Favours Sustainability in Farming
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The Bank of Ireland is placing a growing emphasis on the environmental sustainability of agricultural operations within its lending procedures.

Eoin Lowry, the Head of Agricultural Services at the Bank of Ireland, highlighted the significance of the agricultural sector's shift towards adopting more environmentally friendly practices.

Financial institutions hold a distinctive position that allows them to facilitate the transformation of any sector by means of investments and funding. The Bank of Ireland is committed to assisting not only farms but also clients, consumers, and processors who are proactively seeking higher sustainability standards.

In the forthcoming years, regulations will necessitate companies to divulge the sustainability aspects of their supply chains. Similarly, banks will also be required to disclose sustainability metrics. Lowry underscored the heightened interest of investors in the environmentally conscious aspects of the Bank of Ireland's lending practices.

Nevertheless, a primary challenge revolves around the lack of clarity concerning future environmental policies for farmers. This prevailing uncertainty not only dampens confidence but also impedes investments in agricultural enterprises. Farmers are yearning for greater certainty, particularly when procuring loans, to safeguard their future income.

At present, the Bank of Ireland serves a substantial customer base of 82,000 farmers, predominantly mixed and beef farmers. Lowry underscored the notable investment that Irish farms necessitate, particularly in terms of land. The demand for land has surged significantly since the onset of 2023, while the supply has remained static, consequently leading to escalated prices.

The bank envisions a heightened investment in slurry storage units, calf housing, and the modernisation of farmyards. In the context of crop cultivation, there is an optimistic outlook despite fluctuations in the grain market. However, achieving the government's target of expanding the tillage area to 400,000 hectares by 2030 appears challenging due to the environmental pressures exerted by the dairy sector.

As part of its lending evaluation process, the Bank of Ireland evaluates the environmental key performance indicators (KPIs) of each farm. The bank scrutinises factors such as fertiliser application rates, quantities of slurry spread, and stocking rates. These KPIs are integral to ensuring that farmers possess the capacity to honour loan repayments amidst potential environmental regulations and policy shifts.

The Bank of Ireland is committed to safeguarding its clients by taking into account the loan's repayment ability and elements such as stocking rates and slurry storage. With a significant 52% market share for new lending to farmers, the bank closely monitors overarching market trends.

Despite the gradual reduction in total debt on Irish farms over the last 15 years, the average farm debt has seen an increase. The proportion of farms in Ireland burdened by debt has declined from 53% in 2022 to 39% in 2023. Nonetheless, the combination of low interest rates, robust farm output prices, and profitability has led to a decrease in new lending to Irish farms in the initial quarter of this year compared to the previous year.

By giving higher priority to environmental sustainability in its lending decisions, the Bank of Ireland is actively contributing to the advancement of more ecologically sound farming practices while simultaneously ensuring the financial well-being of its clientele.

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Source: Gillett News


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