A global investor coalition is urging today governments to disclose specific targets for reducing agricultural emissions as part of Nationally Determined Contributions (NDCs) in the lead up to COP26. A research by WWF, found that there are only a handful of countries that specifically mention agriculture in their sectoral targets. Without that information, decarbonization efforts in the agricultural sector may fail.
Countries participating in the COP26 climate talks in November, are required to submit their Nationally Determined Contributions (NDCs), non-binding plans set by national governments defining their intensions with regards to climate change-related actions including targets, policies and measures to curb down greenhouse gas emissions.
According to FAIRR Initiative, the collaborative investor network worth $5 trillion, none of the G20s countries have currently released NDCs which include clear national targets for emissions reductions in the agriculture sector, accounting for a third of all global emissions.
This is not the case, the group argues, with other high-emitting sectors such as the energy and transport, where investors have now more room to diversify their portfolio towards greener investments.
“Governments are making progress with ambitious pledges to reduce emissions, but if we are to meet the goals of the Paris Agreement, countries must also say how they will tackle the high level of emissions from the agricultural sector as part of their national climate commitments,” said Ban Ki-moon, former secretary-general of the United Nations, who is backing the FAIRR Initiative.
Cows are the new coal
Agricultural sector emissions include those from the livestock sector, responsible for 15% of greenhouse gas. Analysis shows that 40 of the world’s largest meat firms face losses of up to $11 billion from potential carbon taxation.
Among investors in FAIRR Initiative, the world’s fastest-growing network focusing on ESG risks in the global food sector, appears Legal & General Investment Management (UK), Canada Post Corporation Pension Plan, Aviva Investors, Green Century, Hermes EOS, Akademiker Pension, Storebrand, SCOR and Handelsbanken.
In their statement, titled ‘Where’s the Beef?’, investors of FAIRR Initiative urges G20 governments to disclose those numbers. It is important for investors to know what role this often-overlooked sector will play in their decarbonisation plans: “If investors don’t know where they are going, anywhere will do. Reducing emissions without a roadmap for how to get there is not only ineffective but highly damaging for investors and companies keen to ensure a fair and equitable transition to a net-zero economy”, said Jeremy Coller, chair of FAIRR and chief investment officer of Coller Capital.
Clearer figures within NDCs would boost the confidence of investors to mobilise capital towards more sustainable food and farming. “We recognise that achieving net-zero emissions globally is a very demanding target, however, excluding the agriculture sector does not make sense. If managed well, it could also serve as a ‘carbon sink,” said Alexander Burr, ESG policy lead at Legal & General Investment Management .
Investors within the FAIRR initiative are already engaging with stakeholders on climate risk. Earlier this year, it coordinated a $ 11 trillion global investor engagement with the fast food sector on its climate footprint, asking six leading fast-food chains with a market cap of $260 billion to de-risk their meat and dairy supply chains by setting ambitious targets to reduce their greenhouse gas emissions. Five of those firms announced they have set, or are planning to set science-based targets.
The EU has pledged to cut carbon emissions at least 55% by 2030 compared with 1990 levels and so far it submitted a single NDCs on behalf of its countries. Its member states’ food production system is responsible for 26% of global greenhouse gas emissions, where livestock emissions represent around half of them.
During the 2014-2020 period, the Commission allocated over a quarter of the Common Agricultural Policy (CAP)’s budget to mitigate and adapt to climate change. According to the European Court of Auditors (ECA), the EU budget’s external auditor and independent guardian of the EU’s finances, so far the EU spent half its climate budget on a drive for greener agriculture, but failed to reduce farming emissions. “The EU’s role in mitigating climate change in the agricultural sector is crucial, because the EU sets environmental standards and co-finances most of Member States’ agricultural spending”, said Viorel Ștefan, the member of the European Court of Auditors responsible for their latest report.
Under the current EU rules, each member state decides whether or not its farming sector will contribute to reducing agricultural emissions. The lack of clear and binding national targets is disincentivizing even further climate action from agriculture firms. As EU agricultural funding destined for climate action has not contributed to reducing greenhouse gas emissions, the role of private investors could be crucial.
Traditional farming methods and practices are behind the high amount of emissions released by the agricultural sector. Reallocation of investments towards emissions-reducing technologies could sharply cut down row crop emissions and make farm management practices more sustainable.
A recent study from Hi Fidelity Genetics (HFG), a computational crop breeding company, shows that changes in farming practices could cut greenhouse gas emissions by 70%: “Our goal was to show that with the right investments and policies, agriculture could realize its potential to be a leader in attacking the root causes of climate change,” stated Philip Benfey, cofounder of HFG.
The researchers found that optimizing the efficiency of current technologies to reduce the use of nitrogen fertilizer, which is the largest contributor to row crop emissions, could reduce nitrogen application by 36% enabling to achieve a 23% emissions reduction. Replacing current technology with second-generation technologies such as crop genetics, electrical ammonia synthesis, microbial synthesis of nitrogen, and electric farm equipment, could reduce emissions by 41% over the next five years. Conducting a full-system redesign of agricultural practices could reduce emissions by 71% within 15 years.
As the global and regional regulatory landscape moves to accelerate sustainable policies within the whole food system, including lab meat production, clear national targets for the food supply sector could lead to a better managed transition.