TRANSITION IN ACTION

The report examines the role of sustainable debt in transitioning the agri-food sector to net-zero, highlighting the need for finance to reach smallholder farmers. It introduces new Climate Bonds Sector Criteria for Agriculture Production and Deforestation and Conversion Free (DCF) Sourcing to standardize green activities. The analysis reveals that while sovereign issuers dominate the AFOLU sustainable debt market, there is a critical need for more material KPIs beyond scope 3 GHG emissions and greater transparency in the loan market to scale impactful investments.

• The Agriculture, Forestry and Other Land Use (AFOLU) sector contributes approximately 30% of total global anthropogenic greenhouse gas (GHG) emissions, yet it possesses a unique capacity to sequester more carbon than it emits.
• Climate transition finance uptake in the AFOLU sector is slow due to the vast number of farms requiring funding, insufficient overall funding, and the difficulty of measuring impact across context-specific transition levers.
• In 2023, aligned green, social, and sustainability bonds with use of proceeds (UoP) for sustainable financing frameworks including agriculture or fishery projects reached USD 160 billion, with sovereigns being the largest source at 58%.
• The International Fund for Agricultural Development (IFAD) estimated an annual requirement of USD 400 billion until 2030 for rural development and food systems; the primary barrier is a lack of efficient mechanisms to channel capital to farmers and SMEs rather than a global lack of available funds.
• Climate Bonds Initiative is introducing new science-based Sector Criteria for Agriculture Production and Deforestation and Conversion Free (DCF) Sourcing in 2024 to provide a global certification scheme for entities and debt instruments.
• Analysis of 11 sustainability-linked bond (SLB) issuers in 2023 showed that while 7 had company-wide DCF commitments and 7 supported smallholders, hardly any had short-term targets for scope 3 emissions.
• Effective sustainable finance in agri-food must move beyond GHG emissions to include material KPIs such as the percentage of geo-localized production area (GPS polygon mapping) and the volume of certified DCF commodities purchased.
• Local banks are critical for reaching producers, but their current sustainable finance frameworks often fail to capture the broad range of eligible transition activities, such as alternative proteins or supply chain improvements.

APA

Sharma, D., & Laurent, S. (2024). TRANSITION IN ACTION. Climate Bonds Initiative. https://www.climatebonds.net/files/documents/publications/Transition-in-Action-Agri-Food.pdf

Chicago

Sharma, Deepak, and Sabine Laurent. TRANSITION IN ACTION. Climate Bonds Initiative, 2024. https://www.climatebonds.net/files/documents/publications/Transition-in-Action-Agri-Food.pdf.

Wikipedia

{{cite report |last1=Sharma |first1=Deepak |last2=Laurent |first2=Sabine |title=TRANSITION IN ACTION |publisher=Climate Bonds Initiative |date=April 2024 |url=https://www.climatebonds.net/files/documents/publications/Transition-in-Action-Agri-Food.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{sharma2024transition, author = {Sharma, Deepak and Laurent, Sabine}, title = {{TRANSITION IN ACTION}}, institution = {Climate Bonds Initiative}, year = {2024}, month = apr, url = {https://www.climatebonds.net/files/documents/publications/Transition-in-Action-Agri-Food.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }