Foreword

Dear reader,

For the first time in 2024, the global average temperature was more than 1.5 degrees Celsius higher than the pre-industrial level. Already today, German agriculture is clearly feeling the consequences of climate change: fluctuating income due to extreme weather events, heightened pressure from harmful organisms, and increased erosion are just a few examples. However, agriculture itself is a not insignificant source of greenhouse gas emissions. Because food production is based on biological processes, these GHG emissions can presumably never be completely eliminated. Agriculture is a systemically relevant sector and an important economic and resilience factor for our country. The agricultural sector has already met the targets of the German Federal Climate Action Act for 2020, and with the right support it will also meet the targets for 2030. The following question is central to the ambitions of Landwirtschaftliche Rentenbank and many other banks: How can we align our financing programmes for the agricultural sector with the 1.5°C target while also ensuring that banks can continue to finance the full breadth and diversity of the agricultural sector? After all, agriculture finance is and will always be our core task. The present Climate Strategy is part of our answer to this question. Its goal is to support agriculture in its transformation towards sustainability, particularly by means of targeted investments. Investment is the indispensable prerequisite for reducing greenhouse gas emissions without harming the economic viability of the agriculture sector.

In view of all these factors, we want to engage in a broad-based dialogue with many agricultural enterprises and lending banks to ensure that the necessary investments can be made. We particularly also want to support those agricultural enterprises whose GHG emissions are still very high today. To address this challenge, we intend to develop precisely tailored, customer-focused offerings. Already today, our special promotional programmes, innovation promotion activities, and sector initiatives promote agricultural practices that contribute to climate change mitigation, although we have not yet been able to quantify this contribution. The calculation and decarbonisation of portfolio emissions, particularly in agriculture, is a major challenge. Data availability and suitable metrics are key hurdles to overcome. However, we are determined to master this challenge. Our goal is to develop solutions that will make it possible to quantify greenhouse gas emissions and clearly highlight the major contribution that agriculture makes to climate change mitigation and biodiversity preservation. We are convinced that banks’ agriculture financing portfolios can be aligned with the 1.5°C target in consideration of all conflicting goals while also ensuring that agricultural enterprises can obtain the financing they need to remain viable, which is a societal necessity. We are collaborating with all relevant players in agriculture to meet this challenge.

Nikola Steinbock
Chairwoman of the Management Board of Landwirtschaftliche Rentenbank