As part of our collaboration with Digital Catapult to produce more efficient, resilient and sustainable supply chains, IB1 has convened an advisory group of industry experts that represent stakeholders from across the Food Supply Chain. Our work will support the development of a robust data sharing governance that builds trust between organisations.

On September 30th we kicked off our first advisory group meeting, bringing together experts spanning the fields of Government, Tech, Environmental NGOs and Research, and Academia.

Connecting Farm Management with Green Financing

Our use-case driven approach serves as a lens to focus our work, with our advisory group meeting offering a collaborative space to refine and test our ideas. The central goal of our use case is to connect Farm Management in the real economy with green financing in the financial economy. Linking the two would mean UK farmers sharing trusted data on their sustainable practices with banks, in return for favourable financing. If successful, the project could bolster the UK’s food security and bring us closer to our net zero targets.

During our advisory group meeting, participants were divided into breakout sessions in which members quickly identified the key stakeholders needed along the value chain. “Retailers and food services have significant influence in shaping sustainable standards in the food industry,” noted one participant. Insurers were also highlighted as key players given their role in de-risking green investments and providing more confidence to financiers.

Practices vs outcomes

As the discussion evolved, members began to draw a distinction between financing sustainable outcomes and financing sustainable practices. Sustainable outcomes focus on achieving measurable environmental goals, such as reducing CO2 emissions. This aligns with frameworks like green bonds and sustainability-linked loans and offers banks a way to meet regulatory requirements and mitigate reputational risks.

One participant from an environmental NGO looked to practice-based financing as the more measurable option of the two, and a potential area of focus. “Practice-based financing might be a better choice as there is seemingly less risk. Banks might be less inclined to lend based on a predicted future outcome such as future CO2 reduction”. What’s more, funding sustainable practices might be more aligned with the value chain transformation aims of this project. If we look elsewhere for comparison, we can see schemes like HSBC’s Sustainable Farming Pathway with LEAF (Linking Environment And Farming) as an example of funding more sustainable practices. The scheme gives farming businesses discounted loan fees for transitioning to more sustainable practices.

Carbon reporting tools

Another piece of this puzzle are the tools that farmers need to collect and manage their sustainability data. Farmers have access to a plethora of carbon accounting tools but these lack a consistent framework, leading the food sector down a path of inconsistent data collection and reporting as one participant points out, “these tools are often not aligned and lack standardisation when it comes to data collection and reporting”.

For farmers to fully leverage green finance, they need better tools to collect and manage their sustainability data, while lenders need reliable, auditable data to assess and verify these practices. But, sharing of sustainable practice data between farm and lender is not well linked up. In some cases the data is shared via email or excel spreadsheets. Therefore, we see a fundamental requirement for a consistent data-sharing infrastructure to ensure traceability and trust in sustainable practices.

“The key challenge is that fragmentation exists between standards, tools and regional governance. Layering standards will only increase complexity, so we must simplify”

Assurance & Provenance

Two key elements in building this trust are assurance and provenance. Assurance refers to the metadata that allows stakeholders to trust a dataset, using machine-readable signals to verify data authenticity. Provenance provides a detailed record of where the data came from, who processed it, and what was done to it. This means that participants cannot deny their involvement in the data’s creation or modification, and it enables full auditability through a Trust Framework. Banks, in particular, are pushing for increased data traceability to establish trust in the supply chain, making this an essential component of our project.

Our next advisory group meeting is set to take place on 25th November. If you, or someone in your network would be a good fit, please sign up here or contact icebreaking@ib1.org for more information.