An Environmental, Social, and Governance Analysis of the Farm Credit System
The Farm Credit System faces a major moment of opportunity and accountability. The nation’s oldest government-sponsored enterprise (GSE), Farm Credit was founded more than a century ago to provide dedicated financial services to underserved farmers and rural communities. With nearly $350 billion in assets, Farm Credit cumulatively is the largest lender to the agricultural sector, making approximately 45% of all agricultural loans. Yet many believe that the system, given its largesse, inherent public purpose and public support, should be much more assertive in helping address our myriad agricultural and food-system needs. Since its founding in 1916, Farm Credit has been financed through a combination of public support and private investment. This paper documents leading environmental, social, and governance (ESG) risks and shortcomings at Farm Credit and recommends changes to help the System more fully meet its basic public purpose: to help farmers and rural communities access affordable, reliable capital. Farm Credit’s hesitancy to incorporate ESG factors into its lending processes presents not only substantial—indeed systemic—risks but also opportunities missed.