EarthDaily Customer Traive, Utilizing Earth Observation to Unlock Sustainability-Linked Finance in the Brazilian Market.
Agriculture Green bonds.
With ties to financial innovation going back to time immemorial, the unique and evolving needs of the agricultural sector have been met time and again by the introduction of transformative new technologies. In the current era when global financial institutions face significant practical and cost hurdles in applying the principles of sustainability across geographically diverse and dynamic portfolios, EarthDaily Analytics is helping the Brazilian market usher in a powerful new financial instrument: the sustainability-linked Agricultural Receivables Certificate (“Green CRA” from the Portuguese).
A non-traditional debt instrument providing crucial financing to Brazilian agribusinesses, CRAs simultaneously meet the needs of non-bank investors looking for direct exposure to the real economy and provide an important alternative to conventional credit lines through a bank. Green CRAs add an important and innovative component to the instrument, providing sustainability-linked criteria by which issuers can qualify for preferential borrowing terms; lenders are able to provide a direct incentive for sustainable practices, while borrowers on the front lines are able to economically pursue principled sustainability goals that might otherwise be cost prohibitive.
Effective Compliance Monitoring at an Unmatched Scale
It’s all well and good to agree that sustainability is important or that deforestation is problematic, but for Green CRAs to be viable beyond niche applications, effective compliance monitoring at scale presented a major hurdle for which Earth Observation is uniquely well suited.
With the help of EarthDaily Analytics, Brazilian fintech platform Traive is harnessing Earth Observation to help de-risk CRAs, supporting new business opportunities, expanding producers’ access to capital, and building out the system of incentivization undergirding effective sustainability.
In its recent Green CRA offering, the second such offering executed with support from EDA, Traive has successfully issued a US$47 million Green CRA to benefit 122 farms across the Brazilian states of Mato Grosso, Goias, and Matopiba. With consistent satellite monitoring and analysis from EDA, Traive was able to provide global bond investors with confidence about not only the up-to-date growing status of the relevant fields, but also that the geographically remote portfolio of farms would maintain continuous compliance with the Green CRA’s requirements around the protection of native vegetation and the avoidance of deforestation.
Each month, EDA provides Traive with a detailed report on the evolving environmental risk and agronomic profile of each of the 122 CRA-funded farms. Across a vast geographic region encompassing diverse climates, soil types, and native plant life, EDA flags areas requiring attention in a timely manner so as to provide investors with confidence and – where appropriate – to enable prompt redress and unbroken compliance.
Don Osborne, CEO of EarthDaily Analytics, commented,
“By bringing the scalability, quantifiability, and cost effectiveness of Earth Observation and the unique data analysis capabilities of EDA to the field of Green Finance, we are proud to make it possible for well-intentioned capital to effectively incentivize green farming practices and disincentivize Amazonian deforestation via a well-functioning market mechanism. Effective monitoring at this scale would have been infeasible and cost prohibitive without the utilization of EDA’s Change Detection capabilities, and we are extremely proud to have made this impactful project possible for the benefit of the farmers involved, the Brazilian people, and ultimately the planet as a whole.”
Earth Observation’s Next Chapter Starts Now
The remote sensing and change detection industries will become dramatically more powerful and capable with the launch of the next-generation EarthDaily Constellation in 2024. A 10-satellite constellation configured to provide daily coverage of everywhere, every day, the EarthDaily Constellation’s analytics-ready data and actionable insights are set to transform risk management and decision-making across diverse applications such as optimizing agricultural practices, managing water resources, disaster response and mitigation, ESG monitoring, natural resource management, compliance assessment, and more.
How Can Working with EDA Supercharge Your Business?
To learn more about how EDA and the forthcoming EarthDaily Constellation can help guide the next generation of risk management and performance optimization for your business, contact our team.