Sustainable finance and agriculture productivity: new frontiers, solutions, and policy directions for agribusiness
Sustainable finance is defined as "the process of taking environmental, social and governance (ESG) considerations into account when making investment decisions in the financial sector, leading to more long-term investments in sustainable economic activities and projects." (World Bank, 2021). Environmental factors include biodiversity loss, greenhouse gas emissions, water consumption, and pollution. Furthermore, social factors consist of labour relations, equality, human rights, workers' safety, and health. Lastly, governance factors include shareholder rights, corporate governance, transparency, management pay, and board independence. These ESG elements make sustainable finance different from traditional finance. In addition, sustainable finance provides substantial monetary and social advantages, which is why it continues to gain popularity.
The field of agriculture in the present century confronts various obstacles, such as a rise in food demand due to a rising population and changing lifestyles and diets, depletion of natural resources and biodiversity, and levelling off crop yields. Furthermore, climate change effects pose additional challenges to agriculture. Rapid climate change may reduce food yields by more than 25%, while severe weather events linked to climate change can be catastrophic to farmers, crops, and lands. Transforming the agricultural sector and boosting productivity will not be achievable until the amount of capital available for sustainable agricultural investments is greatly increased. Hence, to resolve the prevailing concerns of the agricultural sector, there is a dire necessity to go for sustainable financing.
Sustainable financing will play an essential role in fostering agricultural productivity. The idea of s Sustainable finance in agriculture aims to provide financial tools and market structures that distribute resources to maximize total social returns while accounting for financial and non-financial risks (Campos, 2021). The main primary providers of finance to the agriculture sector agriculture sector finance providers are commercial and cooperative banks, credit guarantee institutions, credit unions, public banks, leasing firms, agriculture input suppliers and cooperatives, and microcredit organizations. The main agricultural issues like scarcity of food, an implosion of crops, lack of agricultural reforms, inadequate irrigation infrastructure, and climatic changes highlight the necessity for improving government effectiveness, transparency, regulations, and governance.
Sustainable finance will ensure that agriculture produces more food to feed an increasing world population, will support global development, and eradicate poverty in many developing nations. Khan et al. (2022) state that green initiatives can help to achieve sustainable development goals through carbon market tools, green banks, green bonds, Fintech, community-based green funds, and new green policies. Further, Sachs et al. (2019) claim that the productivity of industries can be improved by increasing finance, which has a good environmental effect. This financing is referred to as "green finance".
Green finance is a subset of sustainable finance. Sustainable finance is the most comprehensive term that includes all financing activities leading to sustainability. In addition, environmental, social, and governance aspects are part of sustainable finance. Conversely, green finance incorporates environmental financing but ignores social and economic elements (Brenya et al., 2022; Lee & Lee, 2022). Several studies address the link between green finance and economic growth (Ma, 2022; Yin & Xu, 2022; Ning et al., 2022; Ngo et al., 2021), green finance and environment (Tran, 2021; Zhou et al., 2020; Huang & Chen, 2022; Zhang et al., 2021), and green finance and energy efficiency (Rasoulinezhad & Taghizadeh-Hesary, 2022; Yu et al., 2022; Wang et al., 2021), but unfortunately, the amount of empirical research that quantitatively investigates the association between sustainable finance and agricultural productivity is relatively limited. Hence, scarce literature and the emerging prominence of the sustainable finance-agriculture nexus creates a timely opportunity for scholars to investigate and propose new frontiers, solutions, and implications for the agriculture-finance sector.
Therefore, this special issue welcomes work that focuses specifically on the broadest term, i.e. sustainable finance, and also the evaluation of how sustainable finance can assist in fostering agricultural productivity.
Topics and themes
Areas of interest include, but are not limited to, the following topics:
- Sustainable finance fosters agricultural productivity.
- How do banking and financial products support sustainability in Agribusiness?
- How can better socio-economic factors improve agricultural productivity?
- What is the role of governance in the agricultural sector?
- Can sustainable financing work in agriculture?
- Sustainable financing and agricultural growth in emerging economies.
- Are emerging countries ready to embrace sustainable financing for better productivity?
- Key governance challenges for implementing the sustainable finance roadmap.
- Does the growing sustainable finance trend intensify the trade-off between environmental protection and economic development?
- How can environmental, social, and governance risks be minimized for better allocation of sustainable finance?
- How can farmers take maximum benefits from sustainable financing?
- Is sustainable finance the future of the agriculture sector?
- Increasing challenges in the agricultural sector can be tackled with the help of sustainable finance.
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Authors should select (from the drop-down menu) the special issue title Sustainable finance and agriculture productivity: new frontiers, solutions, and policy directions for agribusiness at the appropriate step in the submission process, i.e. in response to “Please select the issue you are submitting to”.
Submitted articles must not have been previously published, nor should they be under consideration for publication anywhere else, while under review for this journal.
Opening date for manuscript submissions: 1 February 2023
Closing date for manuscript submissions: 1 July 2023