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Industrial farming practices are degrading the world’s soil. Investors who want to make an impact can buy green bonds whose proceeds are earmarked to finance precision and organic farming.


One-third of the world’s soil is degraded, according to the United Nations, and over 90% could become so by 2050. Synthetic fertilizer causes soil acidification, and synthetic pesticides harm human health and cause pest and disease resistance. Alternative farming practices offer solutions. Precision farming techniques allow the application of chemicals with more accuracy and in lower quantities. Biological alternatives to synthetic fertilizers and pesticides are more environmentally friendly.


Investors who want to use their capital to make an explicit and measurable impact on farming practices can buy green bonds—debt instruments issued by governments and companies to finance environmental investments. About $25 billion of capital raised through the green-bond market was earmarked for land-related projects in 2021. This represents 5% of the $500 billion worth of green bonds issued.


As assurance to investors, Morningstar Sustainalytics provides second-party opinion services to the green-bond market. For new bond issuance, Sustainalytics provides second-party opinions on the credibility and impactfulness of the issuance framework set up by the issuer, as well as its alignment to market standards. Sustainalytics also provides annual reviews on the quality and transparency of reporting after issuance.


In May 2021, Sustainalytics published a second-party opinion on the Kellogg Sustainability Bond Framework. One of the seven use-of-proceeds categories in the framework is "environmentally sustainable management of living natural resources and land use."


Within this category, Sustainalytics notes that Kellogg intends to use bond proceeds to finance the procurement of food that is certified under credible sustainability certification schemes and that Kellogg will consider investments targeted at the protection and restoration of natural resources, including technical assistance for forest soil regeneration. Overall, Sustainalytics judges Kellogg’s framework to be credible, impactful, and in alignment with market standards. In 2021, Kellogg raised EUR 300 million under the framework.

Global green-bond use of proceeds, 2021 (Total 2021 issuance: $500 billion)

Data Source: Climate Bonds Initiative

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