New report unveils potential of private sector green finance for farmers

28 March 2023

An arial photo of hill farms in Yorkshire.

A new report published by Defra and the GFI (Green Finance Institute) indicates a greater need for financial support to help farmers deliver climate and environmental improvements alongside food production. The report explores how private sector sources of finance can be unlocked at scale to support farmers with this transition. 

In September, the GFI brought together a cross-sector strategic working group of 15 members to identify barriers, address concerns and recommend solutions. The group convened every three weeks over the course of six months, in addition to hosting four public workshops and conducting interviews with over 75 people from across the agricultural sector.

The group explored a common set of barriers that are preventing readily available private sector finance from flowing into the farming transition. The report lays out four key opportunities to unlock private sector finance at scale and pace for farmers, as well as additional considerations that emerged from the workshops and interviews. 

“Greater access to private sector finance will enable British farm businesses to continue to invest in this important work and, crucially, build business resilience.”

NFU President Minette Batters


You can read the report here on the Green Finance Institute website: Financing a Farming Transition

Four key enablers to unlock private sector finance

The report outlines four key enablers identified by strategic working group to unlock private sector finance at scale and pace for farmers, with recommendations for implementation and considerations around challenges. These include: 

  • Data access and availability: Making environmental and habitat data sets more easily accessible would help farmers, banks and the private sector in sourcing accurate data to integrate natural capital into their businesses and decision-making processes.
  • Priority environmental outcomes metrics: A government-defined set of priority environmental outcome metrics and best-practice measurement guidance would clarify for farmers the environmental data they may want to collect, as well as spur on the banks, investors and supply chain actors to support farmers in data collection.
  • Environmental markets guidance and principles: There is a need for greater clarity and formal guidance on how environmental markets will operate including the role of blended finance, the ability to stack or blend ecosystem services, over-arching standards for emerging codes, the inclusion of different forms of tenure in agreements and tax treatment of ecosystem services.
  • Aggregation model support: An Aggregation Community of Practice, further funding and guidance and principles around aggregation would encourage widespread take up of aggregation models.

Many areas to consider

Within each of these key enablers there is much to consider, such as data privacy, governance, and impacts on costs for government, farmers and the private sector. Cross-sector collaboration and open discussion will be essential in ensuring these enablers - and the flow of finance towards the farming transition at scale they are intended to unlock – are delivered.

The NFU helped inform the recommendations of the report. NFU President Minette Batters said: “As custodians of the land, boosting carbon sequestration, biodiversity and water quality are just as much a priority for farmers and growers as producing quality, nutritious food for the nation.

“Greater access to private sector finance will enable British farm businesses to continue to invest in this important work and, crucially, build business resilience.

“Of course this isn’t a silver bullet. We still need a domestic agriculture policy which works for all farm businesses, and there are serious barriers which need to be overcome, such as access to data to inform decision making and building confidence in the market, if we are to fully grasp the opportunities with green finance.

“But with the right initiatives and a supportive market framework for a range of farm types and tenures, it does give us exciting options.

“As this market develops, it will be crucial for farmers, financiers, policy makers and the wider supply chain to work together to maximise the potential of private sector green finance.”

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