Innovative finance solutions are “urgently needed” to unlock private sector finance for climate-smart rice production, a new report claims.
The ‘Financing Sustainable Rice for a Secure Future’ report from the Earth Security Group (ESG) proposes three innovative finance solutions to support sustainable rice production in line with the Paris Agreement climate targets.
The proposed solutions include a ‘rice bond’ to finance sustainable rice value chains taking advantage of 2020 being a key year for the growth of green bonds in the agriculture sector, as highlighted by the Climate Bonds Initiative.
A rice bond would enable a global rice processor, trader, or retailer to provide farmers with capital to transition to sustainable production, improve farming practices, increase yields and revenue, and become more resilient to climate risks.
ESG also recommends leveraging international climate finance to attract private sector investment for climate-smart rice production.
Country pledges that include rice in their Nationally Determined Contributions (NDCs) would be the first place to start.
At present, forty-eight countries include in their NDCs the commitment to reduce greenhouse gas (GHG) emissions from rice paddies but have not yet outlined how they plan to incentivise the private sector to achieve these targets.
The report presents the outcome of ESG’s work to catalyse innovative finance mechanisms that enable agribusiness, banks, investors, and global climate finance to create new ways of harnessing private sector investment to scale up sustainable rice production.
The report is produced in collaboration with global action partners the UN Capital Development Fund (UNCDF), the Sustainable Rice Platform (SRP), food and agribusiness company Phoenix, the World Business Council for Sustainable Development (WBCSD), and the Swiss Agency for Development and Cooperation (SDC).