I think the decision by Arla to issue ‘green bonds’, linked to the attainment of climate change targets within that dairy business, makes perfect sense.
So much so, that I see no reason why the likes of Glanbia and Kerry cannot follow suit in pretty short order.
The Irish food industry has been telling the world for years about its impeccable environmental credentials and of its total commitment to make sustainability its number one priority moving forward.
In many ways the EU is forcing the hand of Europe’s farmers and food processers to obtain precise climate change targets within a specified period of time.
This transformation will require investment and, quite rightly, Arla is looking at a range of finance options to make all of this work.
Green bond is not ‘free money’
Obviously, the issuing of bonds does not represent free money; investors will have to be paid back with interest. But the fact that Arla has committed to this approach now, surely reflects the multinational dairy co-op’s confidence in securing enhanced returns for its produce down the line.
So, as I see it, the end game should see a scenario unfolding within which farmers are benefitting from improved prices without having to put any of their money up front to get the facilitating investment paid for in the first place.
This outcome assumes, of course, that everything goes according to plan. At this stage it is worth pointing out that Arla has a pretty strong history of successfully driving innovation through its business.
Irish potential to follow Arla move
Meanwhile, here in Ireland we have potential to produce food from grazed grass that cannot be matched anywhere else in the world.
The term ‘Mother Nature’s bounty’ doesn’t come close to encapsulating this ‘good news’ story.
Ireland is also home to a selection of the world’s most forward-thinking food businesses.
So surely it’s not beyond the realms of imagination for these tremendous resources to be combined in ways that deliver long term sustainability for Irish farmers.
I sense that investors from around the world would relish the opportunity of committing to the environmental and climate change credentials of Irish farming and food, if such an opportunity was presented to them.
Climate action
Regrettably, the term climate change is starting to be used as a stick with which to beat Irish farmers.
Talk of having to reduce our milk and beef output as part of the transition to carbon neutrality is dangerous at one level, and totally speculative at another.
The fact is that the attainment of improved efficiency levels alone can revolutionise Irish agriculture in ways that allow it to meet both its climate change commitments and aspirations to produce more food.
During his tenure as Ireland’s agriculture minister, Simon Coveney often referred to the principle of sustainable intensification, where farming and food are concerned.
It would seem that our friends in Sweden were listening intently to what he had to say.