Macdoch Foundation launches natural capital research program in partnership with ASFI

The program will look at ways farmers and financial institutions can preserve ’natural capital’ in their business decisions.

The Australian Sustainable Financial Institute has launched a partnership with the Macdoch Foundation for a research program to look at ways farmers and financial institutions can incorporate the preservation of “natural capital” in their business decisions.

The research program, which will take in data from some 130 Australian farms, comes as the federal government is moving towards mandatory disclosures by companies around climate change-related issues which could come into effect next July.

“The Australian financial system needs to build readiness for nature-related risk and opportunity assessment, disclosure, and reporting,” ASFI chief executive, Kristy Graham said.

“This needs to be underpinned by on-farm practices that will help farmers leverage their natural capital for increased productivity, resilience and sustainability in a changing climate and markets.”

The program will involve developing case studies and working on pilot programs for integrated climate and nature risk assessment, disclosure and reporting using frameworks such as the Taskforce on Climate-Related Financial Disclosures (TCFD) and the Taskforce on Nature-related Financial Disclosures (TNFD).

It will use evidence from the farms involved to help develop indicators of “natural capital” and its linkages with increased agricultural productivity and profitability, adaptation and resilience around climate change, carbon mitigation as well as the benefits of carbon sequestration in the soil.

“ASFI members are deeply involved in the business of agriculture- banking, insuring and providing the capital to advance the work of our farmers,” Ms Graham said. “Without a productive natural environment, there are risks to the ability for agriculture to prosper and grow.”

Macdoch Foundation CEO Michelle Gortan said the aim of the program was to “quantify and make visible the contribution natural capital makes to production in economic terms”.

“Working with the finance sector through ASFI is a critical next step in that work and will help advance our mission to ensure producers are supported to evolve their farm businesses build resilience and improve profitability, and that the partners like banks are there to support them.”

“Developing the financial indicators to align with natural capital indicators will make ‘investing’ in nature in agriculture actually possible. With the right information, skills and capabilities, producers, advisers, and the sector as a whole will be better prepared to manage for climate change and provide the nature-related information increasingly being sought by third parties.”

Ms Graham said the partnership would help with the development of the institute’s road map of recommendations for integrating natural capital into the decision-making of financial institutions in ways that could also have tangible benefits for farmers.