A Study on the Role of Financial Institutions in Promoting Green Transformation of Forest-Friendly Agricultural Supply Chains in China
China's progress in sustainable bulk agricultural products is basically in its infancy, with a single form of adoption, limited coverage of product certification, and few spontaneous behaviors and initiatives. Domestic financial institutions are still in the exploratory stage of taking corresponding measures to reduce capital investment involving deforestation risks.
Based on the current situation in China and international experience, we suggest that domestic financial institutions should start to strengthen the development of forest-friendly agricultural trade finance from both policy and product aspects. For banks, we suggest that they can further improve restrictive lending policies, introduce product incentives and improve evaluation mechanisms; for investors, we suggest establishing forest-friendly investment policies, incorporating forest risk assessment into portfolio strategies as well as joining international initiative organizations; for brokerages, we suggest enhancing education on corporate ESG disclosure and improving traceability of sustainable sources.
