HeavyFinance starts listing Green Loans to provide investors with an opportunity to contribute to climate change mitigation and enhance agriculture transformation from polluting to CO2 removal. These loans have an untypical repayment structure.
Green Loans accelerate the shift to soil management practices like no-till farming and strip-till farming. These are sustainable alternatives to conventional ploughing, however, are being employed in less than 10% of European farmland.
“The conventional farming way requires a lot of manipulations with soil resulting in high consumption of fossil fuels and labour hours, while no-till practice saves time and energy, and most essential leaves soil undisturbed where CO2 removed from the atmosphere can be stored permanently. That’s the first step for farmers to become climate-positive,” explains Violeta Gevorkjan, Head of Sustainability at HeavyFinance.
Interest and repayment
Unlike our typical investment products, Green Loans do not have a well-defined interest rate yet expose investors to the benefits (and potential turbulences) of a rapidly growing Carbon Credit market.
These loans will be issued to farmers with a zero per cent interest rate. However, by adopting sustainable practices, emission reduction will occur, which later will be verified and traded as carbon credits on the international market. Therefore, the interest is attached to the price of carbon credits.
1 tonne of CO2 removed equals 1 Carbon Credit and currently, one carbon credit is worth around 20 EUR. Farmers can generate 2-3 credits per hectare of no-till arable land.
Consequently, farmers will make repayments of a principal amount according to their tailored repayment schedules, but the interest will be repaid once a loan reaches at least 2 years in maturity.
“The aim to make the agricultural sector more sustainable has always been at the very core of our business. Besides returns, retail investors are also mindful of whether their investments have a positive impact on the environment and local communities. Green Loans provide them with a sweet spot of double-digit returns and high positive impact” explained Laimonas Noreika, CEO and Co-Founder of HeavyFinance.
Having in mind the novelty of Green Loans investment product, this first pilot loan is mainly financed by co-founders of HeavyFinance and their close circle. However, everyone can participate with us by investing the remaining amount.
We would love to get your feedback about the new investment product. Upon request, we also send the contract with the farmer for those who have further questions before investing in this loan.