CoBank originates its first sustainability-linked loan with Heartland Co-op with support from EDF

(DENVER, CO) CoBank today announced the launch of its first sustainability-linked loan in partnership with its customer, Heartland Co-op. CoBank, a cooperative bank that serves agribusinesses, rural infrastructure providers and Farm Credit associations throughout the United States, is one of the largest private creditors to the U.S. rural economy. Through this partnership, Heartland Co-op will receive a slight interest rate reduction on its operating line of credit with CoBank if it achieves ambitious goals related to water quality conservation practices and farmer engagement. Environmental Defense Fund supported the development of the loan and advised on the water quality targets.

“We are proud to support Heartland Co-op’s conservation leadership with our first sustainability-linked loan, and to contribute to their future success, as well as that of their farmer members,” said CoBank’s Chief Sustainability Officer Steve Wittbecker. “Our customers’ sustainability efforts can improve the financial health and resilience of their business, and we are grateful to have navigated this complex process with a great set of partners as we pilot our sustainability-linked loan product.”

Heartland Co-op is a farmer-owned cooperative with over 70 locations throughout Iowa, Nebraska and Texas. The co-op’s Conservation Agronomy team helps farmers select the right conservation practices for their operations and connect with a variety of programs and financial incentives that enable conservation practice adoption.

“The cost savings from the sustainability-linked loan with CoBank will help us expand our successful conservation agronomy program, provide more benefits to farmers and improve Iowa’s water quality,” said Tom Hauschel, Heartland Co-op’s chief executive officer. “This initiative will allow us to meet increasing demand from our farmer customers for conservation services that are tailored to their farms.”

Environmental Defense Fund supported the development of the sustainability-linked loan and the targets that Heartland must meet to receive the interest rate discount. If achieved, the annual targets would lead to a 33% increase in annual cover crop acres sold, reaching a total of 98,000 acres — an important investment in soil health and resilience — and a 39% increase in farmer engagement by Heartland’s Conservation Agronomy team by 2028. The targets would also support the installation of more than 200 new edge-of-field structures, including saturated buffers and bioreactors, that filter water and reduce nutrients reaching Iowa streams. 

“The collaboration between Heartland Co-op and CoBank is a great example of a major financial institution recognizing and promoting the business value of agricultural conservation, and an agricultural retail cooperative integrating conservation services into the way it does business. This loan demonstrates how agricultural finance institutions can support their customers in capturing the value differentiation that sustainable agriculture presents in the market,” said Maggie Monast, senior director at Environmental Defense Fund. 

The Great Outdoors Foundation contributed to the overall success of this blended finance initiative by providing a supporting grant to Heartland Co-op. The foundation creates initiatives that enhance Iowa’s environment and improve quality of life through conservation and outdoor recreation. 

“We are proud to contribute to this innovative partnership between Heartland Co-op and CoBank. This kind of cross-sector collaboration supports a sustainable business model needed for both agriculture and conservation to thrive,” said Hannah Inman, chief executive officer of the Great Outdoors Foundation. 

"Partnerships are critical to the success of our conservation agronomy team,” said Ruth McCabe, Heartland Co-op's conservation manager. "Our goals are aggressive, and we are excited to have additional support from our partners to help us do what we do best: getting conservation farming practices in the ground.”