Sustainability-linked loans making an impact on Irish farms
Bank of Ireland's head of agri sector, Eoin Lowry, says that the bank's Enviroflex loans are helping farmers improve the environmental footprint of their farms.
According to Lowry, agriculture in Ireland is at a crossroads. The sector is facing the dual challenge of maintaining productivity while significantly reducing its environmental impact.
With farming directly responsible for 37% of national greenhouse gas emissions, the sector is required to reduce these emissions by 25% by 2030 under the Climate Action Plan.
In response to this challenge, Bank of Ireland has developed an innovative financial solution that recognises the unique nature of farming and supports sustainable agricultural practices.
Agriculture's climate challenge and responsibility
Lowry said: 'The stark reality of how we farmed in the past will not be how we farm in the future.
'At Bank of Ireland,we recognise that the sector needs to play its part in meeting the global environmental and climate challenge. Simply put – if it doesn't, the sector will become unviable and unsustainable.'
Unlike other businesses that can decarbonise by changing light bulbs or heating systems, farmers must fundamentally change how they farm – from the types of animals they raise to how they grow grass and feed their livestock.
The industry has a clear roadmap outlining key actions to address climate change, and most farmers recognise the importance of this transition.
Lowry notes that many sustainable farming practices not only enhance environmental sustainability but can also contribute to improving overall farm profitability.
Additionally, agriculture can support the decarbonization of other sectors, such as energy.
Introducing Enviroflex: Supporting farmers' sustainability journey
Recognising the distinctive challenges farmers face, Bank of Ireland developed Enviroflex, a sustainability-linked loan that supports and rewards farmers who implement sustainable actions on their farms through discounted interest rates.
'Enviroflex recognises that farming is different. It understands that farmers need to go on a journey to change their farms,' Lowry said.
Enviroflex builds on established frameworks, integrating with the Teagasc Marginal Abatement Cost Curve (MACC) and Bord Bia's Origin Green programme.
To qualify, farmers must participate in a co-op sustainability programme and implement an agreed number of sustainable actions on their farms.
Once these conditions are met, farmers can use the loans for general purposes including investing in machinery, farm buildings, solar panels, slurry and wastewater facilities, and milking equipment.
The programme specifically excludes land purchases and working capital.
Collaborative development and industry recognition
Enviroflex was born from collaboration, initially developed with Kerry Dairy Ireland. Rather than reinventing the wheel, Bank of Ireland built upon existing co-op sustainability schemes.
'Enviroflex offers an additional reward to farmers through discounted finance on top of what the co-op is providing,' Lowry explained.
'It is highly innovative and the first of its kind not only in Ireland but across Europe.
'It recognises that farming is different and it supports farmers for doing the right thing on their farms while allowing them to invest in general purpose investments—not just green investments.'
Safeguarding the land for future generations
The relationship between farmers and their land is generational and profound.
As Lowry points out: 'A farmer's greatest asset is their land. It has been handed down from generation to generation in many cases. A field in Ireland only comes up for sale every 200 years on average.'
Source: Bank of Ireland
Bank of Ireland has been financing many family farms for generations and recognises the importance of intergenerational farming and sustainability across lifetimes.
The bank aims to ensure farmers are supported and encouraged to protect and enhance their core asset.
'We want to ensure they are not harming nature or the environment, and banks can play a key role here in building farmers' knowledge and awareness and then supporting environmental transition through sustainability-linked loans like Enviroflex,' Lowry said.
Farmer response and expansion plans
The Enviroflex platform has seen a significant success since its launch. Over €30m has been applied for by farmers, with an average loan size of €65,000.
Currently, Enviroflex is available to over 95% of dairy farmers who participate in a co-op sustainability scheme, with 12 co-ops now supporting the rollout across the dairy sector.
Individual co-ops and their representative groups, ICOS and Dairy Industry Ireland, have embraced the initiative, seeing the win-win benefit for their members and farmer suppliers.
'They can be rewarded through the co-op sustainability programme and also be rewarded by a lower interest rate from their bank,' Lowry noted.
The bank has already partnered with Irish distillers and their Spring Barley Sustainability Programme to provide Enviroflex for tillage farmers and is working with other stakeholders to extend the programme to beef farmers in the future.
The future of agricultural finance
Bank of Ireland sees sustainability-linked finance as increasingly important for the agricultural sector.
Such financing not only rewards practices that protect farmers from future risks but also safeguards the bank's investments by ensuring the long-term viability of farming operations.
As agriculture continues its journey toward more sustainable practices, innovative financial solutions like Enviroflex demonstrate how banks and farmers can work together to address climate challenges while maintaining productivity and profitability for generations to come.
Looking ahead, Lowry says Bank of Ireland plans to expand the programme's reach.
'During 2025, we aim to have Enviroflex available to all dairy farmers and roll out the product to farmers in other sectors,' he said.
Lending criteria, terms and conditions apply. Over 18s only.
Warning: The cost of your repayments may increase.
Warning: If you do not meet the repayments on your credit facility agreement, your account will go into arrears. This may affect your credit rating which may limit your ability to access credit in the future.
Bank of Ireland is regulated by the Central Bank of Ireland.
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