Agricultural Lenders Adopt Shared Principles

9 members’ of The Council on Smallholder Agricultural Finance have applied shared social and environmental principles across their loan portfolios. This encompasses roughly $600 million to businesses providing services to 2 million smallholder farmers in Africa, Asia, and Latin America.

Members of the Council on Smallholder Agricultural Finance (CSAF) announced at their regional meeting that they have formally adopted a set of jointly developed environmental, social, and governance (ESG) principles.

CSAF members will continue to employ their own proprietary policies and evaluation tools in conducting ESG due diligence on prospective investments. In addition, beginning this year they also commit to CSAF’s social and environmental principles with respect to borrowers’ ESG practices, including:

  • Exclusion of harmful ESG practices that are destructive to human well-being or the environment. CSAF members commit to not finance businesses engaged in forced child labor, commercial logging in primary tropical moist forest, or any other ESG exclusion practices, which are largely drawn from the International Finance Corporation (IFC) exclusion list;
  • Pursuit of positive ESG practices beyond screening out borrowers with negative practices. CSAF members commit to finance borrowers that are creating economic opportunities for low-income populations, and protecting the environment through sustainable production practices; and
  • Promotion of continuous improvement of ESG practices among borrowers, lenders, and CSAF as a group to encourage socially and environmentally responsible operations and positive impacts. CSAF members commit to pursue improvements to their due diligence processes and tools to strengthen their ability to assess borrower compliance with ESG standards.

Formally launched in 2014, CSAF provides a forum for agricultural lenders to convene on a pre-competitive basis and exchange learning, identify best practices, and develop industry standards around responsible lending practices. Members include: Alterfin, Global Partnerships, Incofin Investment Management, Oikocredit, Rabobank, responsAbility Investments AG, Root Capital, Shared Interest Society, and Triodos Investment Management.

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