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Implementing natural capital credit risk assessment in agricultural lending

Ascui, F ORCID: 0000-0001-6036-3987 and Cojoianu, TF 2019 , 'Implementing natural capital credit risk assessment in agricultural lending' , Business Strategy and the Environment, vol. 28, no. 6 , pp. 1234-1249 , doi: 10.1002/bse.2313.

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Abstract

Agriculture has critical impacts and dependencies on natural capital, and agriculturallenders are therefore exposed to natural capital credit risk through their loans tofarmers. Currently, however, lenders lack any detailed guidance for assessing naturalcapital credit risk in agriculture and are challenged by the fact that the relevant material risks vary considerably by agricultural sector and geography. This paper developsa natural capital credit risk assessment framework based on a bottom‐up review ofthe material risks associated with natural capital impacts and dependencies forAustralian beef production. It demonstrates that implementing natural capital creditrisk assessment is feasible in agricultural lending, using a combination of quantitativeand qualitative inputs. Implementation challenges include the complexity and interconnectedness of natural capital processes, data availability and cost, spatial data analytical capacity, and the need for transformational change, both within lendingorganisations and across the banking sector.

Item Type: Article
Authors/Creators:Ascui, F and Cojoianu, TF
Keywords: agricultural lending, Australia, beef production, credit risk assessment, environmental credit risk, natural capital
Journal or Publication Title: Business Strategy and the Environment
Publisher: John Wiley & Sons Ltd.
ISSN: 0964-4733
DOI / ID Number: 10.1002/bse.2313
Copyright Information:

© 2019 John Wiley & Sons, Ltd and ERP Environment

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