Green bonds hold untapped potential for sustainable agriculture in Asia-Pacific

Smallholder farmers and agricultural small and medium enterprises (agri-SMEs) – key actors in food production – continue to face barriers in accessing capital for climate-smart transitions. Stakeholders across the region are increasingly recognizing that green bonds offer a powerful, yet underexploited, solution to mobilize investments for low-emission, resilient agri-food systems.

“In the push to transform agriculture in the region, financial innovation is essential,” said Mr. Bui Duc Hieu, Deputy Director General of the International Cooperation Department at Viet Nam’s Ministry of Agriculture and Environment. “We must collaborate across countries, institutions and financial sectors to scale up investment in sustainable agriculture. Green bonds can be a game changer in supporting smallholders and agri-enterprises to transition toward low-emission, climate-smart farming.”

The exchange highlighted case studies in Thailand, India, Malaysia, Bangladesh, the Philippines, and Vietnam, offering insights into successful green and thematic bond issuances to mobilize finance for sustainable agriculture. Delegates also explored lessons from international partners such as the World Bank Treasury and Asia-Pacific Rural and Agricultural Credit Association, and discussed new Agriculture Criteria developed by the Climate Bonds Initiative to accelerate investment in sustainable, resilient agri-food systems.

Dr. Pham Quang Minh, Head of Food, Agriculture and Forestry at the ASEAN Secretariat, emphasized the importance of region-wide coordination: “This regional collaboration marks a pivotal moment in shaping an ASEAN-wide approach to decarbonizing agriculture through green finance.”

New frameworks, such as the Agriculture Criteria developed by the Climate Bonds Initiative, are beginning to offer clearer pathways for aligning green bond instruments with both sustainability objectives and investor expectations. This alignment is critical for attracting public and private investment at the scale needed to drive transformation.

FAO’s Natural Resources Officer for the Asia-Pacific, Mr. Beau Damen, noted the urgency of channeling climate finance toward agriculture, which has long been overlooked in green finance flows: “As the tracking of climate finance data improves, it has become clear that it is not reaching the agriculture sectors and smallholder farmers in particular. This workshop has highlighted strong consensus that green bonds are an important, but underutilized vehicle for the public sector to drive investment in climate resilient and low emission agriculture with wider benefits for farming communities and food security. FAO is committed to working with partners in government and the finance community to unlock their transformative potential.”

Momentum is now building for the creation of an ASEAN Green Bond for Decarbonizing Agriculture—a regional initiative aimed at coordinating green bond mechanisms across member states in line with ASEAN’s Green Bond Standards, Sustainable Finance Taxonomy, and collective food security goals. As the region grapples with increasing climate risks and food insecurity, green bonds could offer a critical instrument to reshape its agricultural future.

Agricultural policymakers, development banks, and climate finance leaders from across Asia and the Pacific gathered in Hanoi this week for a high-level Regional Knowledge Exchange to accelerate the use of green bonds as a tool for financing sustainable, climate-resilient agriculture and food systems.

Hosted by the Food and Agriculture Organization of the United Nations (FAO) with support from the Ministry of Agriculture and Environment (MAE) of Vietnam and in collaboration with the Climate Bonds Initiative, the exchange convened delegates from ASEAN member states and beyond to share lessons from national green bond experiences and co-develop pathways to unlock finance for smallholder farmers and agri-SMEs.