Carmel Onions, the Executive Manager of Agribusiness Sustainability at Commonwealth Bank, shares some thoughts for primary producers looking to finance sustainability.

Carmel Onions, the Executive Manager of Agribusiness Sustainability at Commonwealth Bank, leads CommBank's sustainability program for agriculture. CommBank is striving to play a decisive role in its support for sustainable agricultural practices, aligning financial success with ecological stewardship.

Carmel points out that modern banking practices are rapidly evolving to increasingly include environmental factors, moving beyond just traditional financial metrics. There is a growing recognition that natural capital is a valuable factor of production, which has not always been sufficiently reflected in farm-gate prices and which has contributed to its depletion over decades. Part of Carmel's job is elevating the concepts around the potential of significantly improved farm productivity and profitability for clients from building natural capital.

The financial landscape, as Carmel suggests, is transforming due to a heightened focus on the environment. The measurement and valuation of natural capital will become more available, which will drive more nuanced property valuations and analysis. Transparency, reporting and measurement are critical for this shift, and she notes that better quantification of the health and value of natural capital will unlock better decision-making and outcomes.

But what does this mean for primary producers? How can they prepare for this coming shift? And how can they finance practice changes that facilitate more sustainable land stewardship?

Financing best-practice agriculture

Carmel Onions is the Executive Manager of Agribusiness Sustainability at Commonwealth Bank.

There is a great deal of information and peer group support available to farmers about how they can improve their practices for better ecological health and climate resilience, and this support is rapidly expanding across the sector, but many of these practice changes and projects involve a significant outlay of capital.

Have you ever wondered how to finance investment in natural capital or more sustainable management? Carmel outlines four sources for financing investments in environmental stewardship and best-practice land management.

Grants and rebates

The first method of financing on-farm infrastructure and practice changes is through grants and rebates. While farmers may believe that being awarded grant money is an unattainable goal, there are many millions of dollars available to eligible primary producers each year.

These range in focus, from incorporating new technologies and marketing models to building infrastructure for drought resilience and improving biodiversity. A number of organisations either offer grants or can help identify available grants. The Queensland Rural and Industry Development Authority (QRIDA) is an example of a specialist provider of government financial assistance programs, including loans, grants and rebates. There are similar financial assistance providers in most states and territories.

Another way of finding out if there are any current grants that you may be eligible for is to speak to your local Landcare representative or Natural Resource Management body. They are likely to be aware of schemes, programs and grants that might be applicable to your operation.

Environmental markets

The second method for financing best-practice agriculture is through environmental markets. Carmel notes that the recent rise of environmental markets is effectively a way of bringing finance to farmers as a return for their investment in sustainable practice change. These markets offer farmers opportunities to monetise ecosystem improvement, such as through carbon sequestration and biodiversity protection/enhancement.

Carmel notes that the recent rise of environmental markets is effectively a way of bringing finance to farmers as a return for their investment in sustainable practice change.

By getting baseline measurements recorded through a registered authority as part of a registered project, and then implementing sustainable practice changes, farmers can earn financial incentives through the sale of environmental credits. Environmental markets seek to align economic interests with ecological stewardship, creating a win-win situation for both farmers and the environment. Carmel stresses that these markets come with risks and legal obligations and must be thoroughly considered for their suitability to the individual circumstances of the farming business.


Another way of financing best-practice agriculture is through green loans, the first of which was the CommBank Agri Green Loan. The CommBank Agri Green Loan is a straightforward financial solution designed to make 'sustainable finance' more available to all farmers, which was historically only available to large corporations due to the high transaction costs and reporting requirements. The loan provides discounted finance for practice changes that enhance environmental outcomes and addresses the gap in available measurement data by having a long list of pre-approved eligible use cases. 'The discount is designed to reward and incentivise farmers for investing in additional sustainable management,' says Carmel.

Farmers can use the loan for various sustainable initiatives, such as installing renewable energy sources or water-saving infrastructure. It can be used to enhance and diversify pasture or crops for greater soil carbon sequestration or to adopt sustainable practices like time-based cell/rotational grazing. It can also be used for initiatives like reducing emissions from effluent, planting additional shelter belts, protecting remnant and riparian areas, and aiding in entering registered environmental projects.

On-farm payback

The final method of financing sustainable practice changes is the one that Carmel is most passionate about: the on-farm payback. She acknowledges that while initial investments need to be made (which can be financed through grants or sustainable loans), the adoption of sustainable practices builds farm productivity, profitability and/or resilience, all of which directly enhance cash flow.

...while initial investments need to be made, the adoption of sustainable practices builds farm productivity, profitability and resilience, all of which directly enhance cash flow.

When speaking about this, Carmel uses the example of introducing shelter belts on grazing land. Firstly, planting trees for shelter belts helps capture and store carbon, contributing to soil health and reducing on-farm net emissions. Additionally, it promotes biodiversity, both in the soil and above it, creating natural habitats that benefit the whole ecosystem and farm, such as biological pest control.

As well as the carbon and biodiversity benefits, livestock experience lower mortality rates, as shelter belts provide shade and reduced wind speed and wind chill. The trees can also reduce erosion, assist in resolving soil health issues, filter nutrients and protect/restore waterways if planted nearby. Furthermore, the enhanced carbon content in the soil results in more nutritious fodder, which leads to better feed efficiency and weight gains.

All in all, shelter belts not only sequester carbon and support biodiversity but also directly benefit livestock production through reduced mortality and better feed efficiency; in other words, they improve profitability.

'It's one small example of a practice, but all of those things build productivity and profitability and increase resilience, which ultimately reduces cash flow variance over time and also environmental risk,' says Carmel. 'Yes, there's an upfront cost, but there's a return on the investment, there's a multi-year payback.'

How is risk calculated?

Carmel presenting to farmers about Natural Capital

Banks that cater to the ag sector assess risk by looking at how cash flow is managed and how the financial impacts of risks, or uncertainties, are managed and mitigated. They consider profitability and variability, or in other words, financial resilience and overall risk. Environmental risks, such as increasing extreme weather events, are taken into consideration, as are the changing policies around emissions and sustainability for supply chains and export markets.

Banks globally are now also considering the environmental impact of lending, with many committed to reducing their own carbon footprint as well as their financed emissions, as part of global efforts towards net zero emissions.

Having robust management plans, like drought preparedness plans or occupational health and safety (OH&S) plans, indicates proactive risk management.

In simple terms, if you're a farmer applying for a loan, the bank will look at the overall financial analysis of the farm and how you're preparing for risks like drought or flood. They'll be keen to see any contingency plans you have to deal with these risks and keep your business stable.

How can primary producers prepare themselves?

Carmel outlines several ways primary producers can enhance their engagement with their bank to successfully access various sustainable financial streams.

Tell your story

'My advice to farmers is to tell your story, rather than sending over the accounts and leaving someone else to tell your story. Tell banks how you're thinking about changing climate, changing rainfall patterns and big weather events. Tell us how you're preparing for those. What are you doing to be resilient to them? That goes such a long way to supplement the story told by cash flows.'

Carmel mentions that providing financial institutions with a broad overview of many aspects of the business lets them know that a considered and holistic approach has been taken. This can include letting them know of educational courses that have been undertaken, measurements or baselining of soil health occurring, carbon or natural capital projects in the works and any documentation outlining business strategies and risk management. It's also worth letting them know if you've completed an emissions baseline and plan.


There are a few questions primary producers can ask themselves to begin putting together these business plans and risk management documents:

  • What worries me the most from a climate/weather perspective (or any other risks)?
  • What are the risks to the productivity and profitability of my enterprise?
  • What can I do to prepare and help lessen the potential impacts?

Once the key risks to the enterprise are identified, primary producers can create their planning documents.

Some of the most common plans include:

  • Drought resilience plan
  • Bushfire plan
  • Occupational health and safety plans
  • Animal welfare plans
  • Succession plans
  • Overall business plans

By documenting business plans and risk strategies and demonstrating their implementation, farmers can show financial institutions how they actively manage risks that could otherwise affect their agricultural outputs.

Many government agriculture departments and industry bodies offer a range of electronic templates that primary producers can use to build out their plans. Carmel stresses that these documents don't need to be War and Peace, but rather they should be straightforward outlines that demonstrate what the business and risk strategies are.

The future of sustainable finanace

The evolving landscape of sustainable finance in agriculture presents both challenges and opportunities for primary producers. By adopting best practices in land management and investing in environmental stewardship, farmers can not only contribute to ecological health (for their long-term viability) but also enhance their profitability and resilience. The four financing methods outlined by Carmel - grants and rebates, environmental markets, green loans and on-farm payback - offer practical solutions for farmers to undertake these vital changes.

Effective communication and robust planning will be key for farmers to navigate and capitalise on these emerging financial trends, ultimately contributing to a more sustainable and resilient agricultural sector.