TRANSITION IN ACTION

This report by the Climate Bonds Initiative examines the role of sustainable debt and climate transition finance in the agri-food sector, specifically focusing on crop and livestock production. It analyzes the current state of the sustainable debt market, the necessity of reaching smallholder farmers, and the development of science-based Sector Criteria to guide investments toward net-zero goals and deforestation-free sourcing.

• 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 and provide materials for mitigation in other sectors.
• Climate transition finance in the AFOLU sector is hindered by the need to reach hundreds of millions of farms and the difficulty of measuring the impact of context-specific transition levers.
• In 2023, aligned green, social, and sustainability bonds with use of proceeds earmarked for sustainable financing frameworks including agriculture or fishery projects reached USD 160 billion, while USD 3.6 billion of cumulative volumes in sustainability-linked bonds (SLBs) from agri-food issuers were classified as fully aligned.
• Sovereigns are the primary source of AFOLU use of proceeds (58%), and Europe is the most prolific region (63%). Emerging markets account for 41% of the volume.
• The International Fund for Agricultural Development (IFAD) estimated a need for USD 400 billion annually until 2030 for rural development and food systems; the primary challenge is a lack of efficient financial mechanisms to channel capital to farmers and SMEs, particularly in Africa.
• Climate Bonds is introducing new science-based Sector Criteria for Agriculture Production and Deforestation and Conversion Free (DCF) Sourcing to guide the structuring of finance instruments and enable a global certification scheme.
• For a transition plan to be credible, it must include a company-wide commitment to DCF production and procurement for all high-risk commodity supply chains, as land use change is the primary cause of carbon emissions in the sector.
• Sustainable finance for producers should prioritize practices with strong scientific evidence of absolute GHG reduction, excluding those that only marginally improve emissions or risk locking in emissions, such as certain intensive livestock feeding practices.
• Local banks are critical for scaling the transition as they have direct contact with production units; they can provide incentives such as extending debt terms to account for environmental response times or reducing credit costs.
• The report suggests that sustainability-linked instrument KPIs should move beyond scope 3 GHG emissions to include metrics such as the percentage of the spatial footprint rehabilitated for sustainable production or the total area of land set aside for biodiversity conservation.

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} }