What is Climate-Smart Credit?
Climate-smart credit incorporates climate-smart agricultural and land-management practices into loan terms. When a client signs a loan agreement, they also sign a land-management agreement which requires the client to manage their land in a way which is designed to protect them and their farm from climate-change related events.
An example of a Climate Smart Credit Product
This credit product incentivises improved soil conservation to protect soils from heavy episodic rainfall projected to increase with climate change in certain areas of Kenya. Farmers who employ this system protect their soils, improve their yield and reduce their likelihood of credit default. In this specific instance, our partner lender was able to reduce interest rates to reflect reduced client risk.