Environment
Climate change presents an existential threat to smallholder producers and artisans across Shared Interest’s portfolio. From diminishing cocoa yields in Ivory Coast to unpredictable honey harvests in Mexico, our customers face mounting environmental challenges requiring significant knowledge, expertise and financial support.
Recent data from the Climate Policy Initiative (CPI) confirms a persistent, severe funding gap: climate finance for the agri-food sector remains critically insufficient, with only 4.3% of global climate finance directed towards agrifood systems. More concerning still, less than 1% reaches smallholder farmers, small-scale producers and agricultural micro, small and medium enterprises (agri-MSMEs) - precisely those most vulnerable to climate impacts.
Our Research
To better understand the role in building climate resilience, we conducted comprehensive research focusing on two critical sectors: coffee production in Peru and cocoa farming in Ivory Coast, selected due to the high volume of our lending exposure in these regions.
This research included mini-surveys carried out in January 2024 with customers in these commodity and country pairings, as well as research into the activities of organisations working alongside producers, such as CLAC (Latin American and Caribbean Network of Fair Trade Small Producers and Workers), Earthworm Foundation and IDEF (Initiatives for Community Development and Forest Conservation).
Summaries of these research papers can be found in Appendix 14 and 15.
Supporting Climate Adaptation and Mitigation Activities
As a result of this research we are now exploring how we can best support key adaptation and mitigation strategies used by customers such as agroforestry and organic fertiliser use. This exploration includes identifying suitable strategic partners with whom we can collaborate.
Our broader Customer Social Impact Survey revealed significant insights into climate adaptation efforts across our portfolio. Notably, 91% of respondents reported contributing to organisational development projects, though only 9% specifically focused on climate initiatives. This gap between climate awareness and action reflects the multiple challenges these organisations face. More encouragingly, 80% contributed to community development projects, with 64% incorporating environmental components.
Climate impacts are increasingly visible: 57% of customers reported climate-related challenges, including reduced yields, disrupted weather patterns, and increased pest and disease prevalence. In response, 65% have implemented climate resilience training over the past year, covering agroforestry management, EUDR compliance preparation, good agricultural practices, and carbon credit initiatives.
In West Africa, customers face particularly acute challenges. Ivorian cocoa customer CADESA, reported significant yield and quality reductions affecting contract fulfillment and producer incomes. In response, Shared Interest has extended their repayment terms.
CADESA noted: “Shared Interest has been a reliable and serious partner who tries to understand its farmers, if we continue to borrow from Shared Interest, it is its values of support and assistance to farmers that keep us in the portfolio.”
