Financial institutions are indirectly exposed to risks associated with the impacts and dependencies on natural capital and ecosystem services of the companies that they invest in, lend to, and insure. This is particularly true for banks lending to agriculture: a sector with both significant impacts and critical dependencies on natural capital. Bank lending is a vital source of new finance for the sector, which is essential to achieve sustainable intensification targets. Yet current credit decision-making practice is still based on conventional financial and management indicators, lacking any systematic assessment of natural capital risks, especially those associated with dependencies. Operationalising natural capital risk assessment requires practicable indicators and data to evaluate the most material natural capital risks for a given sub-sector and geography, but it is unclear to what extent these are available. We assess the practicability of natural capital dependency risk indicators and data sources for a critical case study of Australian sheep production. We find that at least moderately practicable indicators and data sources are available to assess the 11 major dependency risks that are material for this industry. Challenges remain in determining risk thresholds for most indicators, and quantifying risk impacts on profitability.

As the sophistication of genomic technologies increases and their cost continues to decrease, they are becoming routine tools in livestock breeding programs and production systems. The convergence of electronic measurement systems, cloud-based computing and fast internet enable the use of powerful decision support to help automate and manage livestock production, animal welfare and quality control. The complexity of livestock production systems, combined with the challenges of producing top-quality discretionary products for consumers, means that no single organisation has the range of expertise to support coordinated development of innovation in the relevant supply chains. Collaboration between a broad spectrum of scientists and industry partners is essential to ensure well integrated input to the design and implementation of programs to deliver improvements in efficiency, quality and profit. The need for collaboration among researchers, among research organisations and with end-users has never been more important. Collaboration brings together the skills needed to manage complex problems and enables the sharing of facilities and scarce resources within Australia and internationally. However, the most important component of effective collaboration is the early engagement of end-users to contribute to the design of programs of innovation, to ensure that investment is well targeted and that there is ownership of the problem as well as the solutions delivered through research. Although the potential benefits of effective collaboration are clear, it often takes more than logic to get individuals and organisations to work together. There needs to be a significant financial incentive combined with strong industry leadership and agreed common goals. Allocating resources to establish these foundations for effective collaboration should precede any major research and development funding initiative. The present paper argues that the new face of animal science in Australia should be structured around coordinated programs of research and development, on the basis of effective collaboration.