Challenges and risks related to climate change
The Brazilian agribusiness sector is facing a crossroads: how to remain competitive and grow while adopting sustainable practices that protect the environment and mitigate the impacts of their activities? This was the backdrop to discussions at the “Green Investments and Efficient Land Use” panel during the 2024 Brazilian edition of the Sustainable Future Forum (SFF). The event brought together influential voices from the financial, environmental and agricultural industries, with a clear mission: explore how green financial flows can be key to transforming agribusiness in Brazil.
Moderated by Beatriz Secaf, sustainability leader at BNP Paribas Brazil, the panel featured experts Débora Oliveira, from Votorantim Group, Juan Parodi, IDB Invest, Priscila Souza, Climate Policy Initiative (CPI) and Valmir Ortega from Belterra Agroflorestas. They all shared a common vision: sustainability and innovation are key to the future of Brazilian agribusiness.
The agribusiness progress and its climate risks
According to World Economic Forum’s The Global Risks Report 2024, security risks related to climate change lead the list of global concerns. As such, reducing exposure to risk is key to ensuring the profitability of projects without jeopardizing large-scale food production.
According to Priscila Souza, Head of Policy Evaluation at CPI, the volume of rural credit geared towards sustainable agribusiness has increased significantly in the last two years. “Such growth in green financial flows is a reflection of the fact that the market already understands that the future of agribusiness lies in sustainability.” For Souza, the agricultural sector can no longer rely on traditional practices that compromise soil and water resources. Clean technologies and environmental preservation must be at the heart of operations.
Financial instruments to mitigate risks
According to Juan Parodi, Principal Investment Officer at IDB Invest, multilateral banks play a central role in structuring and offering new financial instruments. “The focus of the institution is on creating instruments that not only render sustainable projects viable, but also protect investors against the risks inherent in these initiatives, such as climate volatility”.
In addition, creating and implementing public policies is an important element in ensuring a secure and stable environment for green investments in the long term. “To reduce risks, we need a regulatory framework that provides security for these projects. This includes policies that encourage the use of new technologies while ensuring the profitability of sustainable operations,” adds Parodi.
Speakers agreed that Brazil will only be able to expand its role on the global sustainable agribusiness stage if innovation, financing and government support work together. In this context, the management of the territory has shifted from being just an environmental problem to a matter of economic inefficiency. “We are destroying valuable resources that could be used in a more productive and sustainable way,” warned Valmir Ortega, a partner at Belterra Agroflorestas.
For Ortega, agroforestry, a system that combines agricultural production with forest conservation and can transform degraded areas into productive and economically viable land, as well as improving soil quality and reducing pressure on natural resources, is one of the solutions with great potential to have a positive impact on this agenda. “Agroforestry is the way to reconcile productivity with preservation. It is definitely possible to produce more with less impact, but this requires a cultural change in the industry”.
The role of big businesses
According to IMF, It takes more than just banks and public initiatives to build a market. The private sector also needs to develop impact initiatives, investing in practices that reduce their carbon footprint and help make their production chains cleaner and more efficient.
Working with local communities was flagged as being key to develop sustainable, long-term practices. By strengthening ties with the people who live in the regions where organisations operate, a network of trust and collaboration is built, which is essential for implementing initiatives that call for behavioral changes and support communities. Furthermore, when organisations invest in local development, they contribute to a fairer social environment.
According to Débora Oliveira, General Manager of Treasury and Investor Relations at the Votorantim Group, the company’s projects are not limited to environmental preservation. They also involve strengthening local communities and protecting the territories where the company operates. “For us, sustainability is about much more than meeting carbon emission targets. We want to generate a real and lasting positive impact, both environmentally and socially.”
What’s in it for the future of sustainable agribusiness?
According to BNP Paribas’ Beatriz Secaf, the key takeaways are related to Brazil’s potential to become a global leader in sustainable agriculture, which can only be achieved if challenges such as deforestation and inefficient land use are overcome. “With increased investment in green credit and the adoption of innovative practices such as agroforestry, the Brazilian agricultural industry can transform itself and spearhead a global sustainability movement.”
All speakers agreed that the future of agribusiness will not only be decided in the field, but also in boardrooms and discussion forums, where alignment among investors, governments and companies can finally produce a development model that is both profitable and sustainable.