ESD-1 – Entity-specific disclosure: conventional and organic farming

Classification in the sustainability statement

The promotion of agricultural enterprises is a core component of Rentenbank’s statutory promotional mandate and is directed at a key profession in rural areas. It is closely linked to the promotion of rural areas, but differs in terms of the nature of its social impacts and the groups affected.

While the following chapter describes the social impacts of support at regional and community level, this chapter focuses on the social impacts of support for farms and the people working on them. The focus is on the indirect social effects of financing on the economic and social stability of agricultural households, as well as on employment, future prospects and resilience in the agricultural sector.

Due to its specific reference to a professional group and the absence of relevant sector-specific standards, this topic cannot be fully assigned to a single ESRS topical social standard. To reflect the high relevance of this topic appropriately, the impacts of promoting agriculture are therefore presented as an entity-specific disclosure.

As part of the double materiality assessment, a positive impact of Rentenbank’s business model in relation to the broad promotion of conventional and organic farming was identified as material. Due to overlaps between the topics and a similar impact logic, these impact areas are presented jointly within a single entity-specific disclosure. The positive impact identified in the materiality assessment is reflected in the downstream value chain through the credit portfolio. Rentenbank’s sphere of influence lies in particular in incentivising particularly sustainable investments through preferential terms and premium terms.

Environmental and climate-related impacts of agricultural production are not addressed in this chapter, but in the environmental standards, in particular ESRS E1 – Climate change.

Scope of application and affected groups

Rentenbank’s promotional activities are generally aimed at all agricultural enterprises in Germany. Conventional and organic farms are considered equal target groups. Programme design and incentive structures take into account different operational structures and requirements without making a normative distinction between production methods.

The social impacts analysed in this chapter relate in particular to the following groups:

• agricultural entrepreneurs;
• family members working on farms;
• employees in agricultural enterprises; and
• in particular, young farmers and farm successors.

The scope of application includes agricultural holdings in primary production, regardless of the form of production, size of the holding or legal form, provided they are eligible to apply under Rentenbank’s promotional programmes.

Impacts, investment objects and beneficiaries

The social impacts of promoting agricultural enterprises arise from Rentenbank’s indirect role as a public promotional institution. Through its programme loans, Rentenbank provides long-term and reliable financing instruments that are used by agricultural enterprises to implement operational investments and stabilise their economic base.

Rentenbank does not directly control social impacts through influence on individual business decisions, but rather through the programmatic design of its promotional programmes. Funding purposes, terms and conditions, and eligibility criteria define the framework within which agricultural enterprises take investment and financing decisions.

The social impacts typically materialise with a time lag and depend on operational, structural and market-related conditions. They relate in particular to the economic viability of farms, the social security of agricultural households and the long-term prospects of the profession as a whole. The economic stabilisation of agricultural enterprises has an indirect effect on employment. Family-run businesses in particular often rely on the support of family members and regional labour.

By supporting viable long-term business structures, the funding can contribute to stabilising employment relationships and thereby strengthening social security in rural areas.

Securing livelihoods and income stability

Agricultural businesses are particularly affected by external factors such as market and price volatility, weather events, animal diseases and rising production costs. These factors can have a significant impact on the economic stability of farms and the living conditions of agricultural households.

Through programmes aimed at securing production, investment and liquidity, Rentenbank supports enterprises in financing current operating resources and bridging temporary liquidity bottlenecks. This support can help to cushion income fluctuations and reduce the risk of short-term business closures with adverse social consequences.

Adaptability and operational development

Investment support enables agricultural enterprises to adapt their production and operating structures to changing economic, technical and regulatory conditions. The social impacts arise in particular from safeguarding long-term income prospects and reducing the risks associated with structural change.

Agriculture is characterised by long investment and amortisation periods, high capital intensity and income-related fluctuations, for example as a result of crop rotations or harvest outcomes. The provision of long-term financing helps to mitigate the social effects of these structural characteristics.

Generational change and future prospects

Rentenbank’s promotional programmes support generational change in agriculture, in particular through targeted promotional conditions for young farmers and farm successors. This applies equally to conventional and organic farms.

Safeguarding viable economic prospects is an essential prerequisite for the willingness to take over a farm and contributes to the long-term social stability of family-run farms.

Promotion of organic farming

Small and medium-sized agricultural enterprises that are in the process of converting to organic farming receive the best possible premium terms under the Focus on Future Fields programme. Through this measure, support is provided to enterprises that are currently in a particular investment phase. This may include, for example, the purchase of machinery or the construction of stables. Through these attractive conditions, Rentenbank supports the German Federal Government’s objectives with regard to the expansion of organic farming.

Classification in the strategy

As one of Rentenbank’s core tasks, the promotion of agriculture is embedded in its business strategy through a dedicated promotional framework. This framework defines actions, targets and metrics.

Fulfilling the statutory promotional mandate is central to Rentenbank’s overall strategic orientation and the related frameworks derived from it. In particular, the promotion of agriculture is reflected in the promotional strategy, which is geared towards ensuring the provision of special promotional loans to Rentenbank’s key customer groups. As the attractiveness and effectiveness of the promotional programmes can be assessed in particular by their take-up, the promotional strategy defines quantitative metrics relating to commitment volume and promotional performance. Appropriate actions are formulated in order to achieve these objectives, for example in relation to the promotional infrastructure and internal processes. In addition, short- to medium-term annual targets are defined for commitment volume and promotional performance.