The ignored large within the ESG dialog? Agriculture

Michael Gilbert is the founder and CEO of Semios, a precision agriculture know-how firm based mostly in Vancouver, Canada.

The views expressed on this visitor commentary are the authors’ personal and don’t essentially replicate these of AFN.

Within the new world of ESG-everything, agriculture has a $3 trillion problem looming round its backside line. That’s the estimated international environmental value to feed people proper now – from emissions like methane, to the utilization of pesticides, fertilizers, and freshwater.

To be clear, farmers have lengthy been stewards of our lands and the environment. But the expansion of our populations and the corresponding scale of meals demand have weighed closely on the atmosphere. As a lot as 17% of world greenhouse gasoline emissions have come from the sector in recent times.

With the assistance of latest and present applied sciences, farmers are rising productiveness whereas decreasing environmental influence. Simply as importantly, they’re quantifying this shift with exhausting information that exhibits exactly the distinction they’re making.

Certainly, as an business that touches each single human being on the planet, it’s changing into clear that agriculture will be some of the highly effective ESG investments on the planet. Right here’s how.

Farmers are taking the lead on ESG – and never simply to please buyers

The ESG or influence investing motion has been led partly by Blackrock CEO Larry Fink, who set out in 2019 to reshape international capitalism with a deal with sustainability and social points. This yr, Fink wrote to shareholders: “Each firm and each business might be reworked by the transition to a net-zero world. The query is, will you lead, or will you be led?”

In agriculture, we’re already seeing the influence, as giant multinationals prioritize relationships with suppliers devoted to decreasing their environmental footprint. Extra farms are investing in know-how that powers data-driven choice making, enabling them to optimize their use of assets.

But, for a lot of farmers, bettering sustainability isn’t merely a matter of satisfying investor sentiment; it’s an operational necessity.

Carbon Collective’s Zach Stein on transferring sustainable investing past ESG – learn extra right here

All the world of agriculture has had to determine easy methods to produce extra with much less. Farmers discover themselves within the midst of a pressure-cooker situation the likes of which the world has by no means seen. Fertile land is in decline, whereas freshwater wants far exceed provide. In the meantime, a rising international inhabitants anticipated to method 10 billion by 2050 means extra mouths to feed. (For perspective, that’s the equal of including a metropolis of round 1.5 million folks to the planet each single week – for the following 28 years.)

So once we discuss ESG having an influence on agriculture, it’s necessary to know these modifications are usually not pushed solely by reactions to investor attitudes. Many farmers are already deeply dedicated to bettering sustainability and utilizing know-how proper now to cut back inputs and prices.

Innovation – not natural – on the forefront

When folks consider sustainable agriculture, they might have an idyllic imaginative and prescient of a interest farm, or probably a bigger natural operation. However whereas these issues are nice, they’re not scalable to feed a rising inhabitants below the situations farmers are going through right now.

Certainly, a number of the most vital ESG-related positive aspects are coming from the combination of latest know-how — and higher information — into large-scale business farming. Strategies like precision farming, indoor rising, and regenerative agriculture enable farmers to extend yields whereas decreasing inputs comparable to water, fertilizer, and pesticides. On a worldwide scale, even small effectivity positive aspects translate to huge environmental financial savings.

Little marvel, then, that agricultural applied sciences noticed report funding final yr, with $5 billion invested in venture-backed startups all through 2021 – a 50% enhance over the earlier yr. These sums replicate the magnitude of the problem, in addition to the potential influence of superior agricultural applied sciences to assist feed the world whereas additionally supporting an ESG mandate.

Farm information fights greenwashing

For all of its lofty targets, nonetheless, ESG investing is affected by a critical Achilles heel: greenwashing. And agriculture isn’t exempt.

As the company world scrambles to make guarantees that appease influence buyers, a lot of them are stretching the reality. In truth, a current ballot confirmed 68% of US executives admitted their firms had been responsible of greenwashing on sustainability pledges. Even the UN is wading into the dialog, putting up an skilled panel to sift by company pledges and maintain firms accountable.

On the subject of farming, how can buyers — to not point out finish shoppers — know that ESG guarantees are actually being met, and that ‘eco-friendly’ claims transcend mere labels? That is the place data-driven know-how represents a robust supply of reality. Sensors and record-keeping platforms in fields right now are capturing detailed, granular data on all the things from water consumption to pesticide utilization. That is permitting farmers to definitively quantify their ESG influence as know-how helps them uncover larger efficiencies.

Proper now, agriculture is quick evolving from a $3 trillion ESG legal responsibility to a $3 trillion ESG asset. Empowered by new applied sciences, farmers are displaying that feeding a rising inhabitants and sustaining the atmosphere aren’t conflicting targets; reasonably, they’re inseparable. Couple that with next-generation know-how able to quantifying agriculture’s results on air, soil, and water in absolute phrases, and the ESG influence turns into crystal clear.