Major agri lenders adopt shared social and environmental principles

16Feb 2017
The Guardian Reporter
The Guardian
Major agri lenders adopt shared social and environmental principles

MEMBERS of the Council on Smallholder Agricultural Finance (CSAF), an alliance of social lending institutions have formally adopted a set of jointly developed environmental, social and governance principles.

The principles apply across the nine members’ loan portfolios, which in 2015 encompassed $597 million to 672 businesses purchasing crops and providing services to two million smallholder farmers in Africa, Asia, and Latin America.

The ratification of these guiding principles is part of CSAF’s broader mission to promote responsible lending among financial institutions serving the needs of smallholder farmers and agricultural businesses globally.

According to CSAF, members will continue to employ their own proprietary policies and evaluation tools in conducting ESG due diligence on prospective investments.

CSAF statement said that in addition, beginning this year they also commit to CSAF’s social and environmental principles with respect to borrowers.

The ESG practices will include exclusion of harmful ESG practices that are destructive to human well-being or the environment.

The CSAF members will be committed to not finance businesses engaged in forced child labor, commercial logging in primary tropical moist forest, or any other ESG exclusion practices, which are largely drawn from the International Finance Corporation (IFC) exclusion list;
Pursuit of positive ESG practices beyond screening out borrowers with negative practices.

The members also committed to finance borrowers that are creating economic opportunities for low-income populations, and protecting the environment through sustainable production practices and promotion of continuous improvement of ESG practices among borrowers, lenders, and CSAF as a group to encourage socially and environmentally responsible operations and positive impacts.

They will also be committed to pursue improvements to their due diligence processes and tools to strengthen their ability to assess borrower compliance with ESG standards.

Formally launched in 2014, CSAF provides a forum for agricultural lenders to convene on a pre-competitive basis and exchange learning, identify best practices, and develop industry standards around responsible lending practices.

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