Why $ 5,000 billion investors want to focus on carbon emissions from agriculture

A global coalition of investors is now urging governments to disclose specific targets for reducing agricultural emissions as part of Nationally Determined Contributions (NDCs) ahead of COP26. A search by WWF, found that there are only a handful of countries that specifically mention agriculture in their sectoral targets. Without this information, decarbonization efforts in the agricultural sector could fail.

The countries participating in the COP26 climate discussions in November, are required to submit their Nationally Determined Contributions (NDCs), non-binding plans defined by national governments setting out their intentions with respect to climate change-related actions, including goals, policies and measures aimed at reducing greenhouse gas emissions.

According to FAIRR Initiative, the network of collaborative investors worth $ 5,000 billion, none of the G20 countries has currently issued NDCs that include clear national targets for emissions reductions in the agricultural sector, accounting for a third of all global emissions.

This is not the case, argues the group, with other sectors with high emissions such as energy and transport, where investors now have more room to diversify their portfolios towards greener investments.

“Governments are moving forward with ambitious emission reduction commitments, 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 the their national climate commitments, ”said Ban Ki-moon, former Secretary General of the United Nations, who supports the FAIRR initiative.

Cows are the new coal

Emissions from the agricultural sector include those from the livestock sector, responsible for 15% of greenhouse gases. The analysis shows that 40 of the world’s largest meat companies face losses of up to $ 11 billion due to possible carbon taxation.

Among investors in FAIRR Initiative, the world’s fastest growing ESG risk-focused network in the global food industry, 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?‘FAIRR Initiative investors urge G20 governments to disclose these figures. It is important for investors to know what role this often overlooked sector will play in their decarbonization plans: “If investors don’t know where they are going, anywhere will do. Reducing emissions without a roadmap to achieving it is not only ineffective, but also very damaging for investors and businesses concerned with ensuring a fair and equitable transition to a net zero economy, ”said Jeremy Coller, President of FAIRR and investment director of Paste Capital.

Clearer numbers in NDCs would boost investor confidence to mobilize capital for more sustainable food and agriculture. “We recognize that achieving net zero emissions globally is a very demanding goal, however, excluding the agricultural sector does not make sense. If managed well, it could also serve as a “carbon sink,” said Alexander Burr, ESG policy manager at Legal & General Investment Management.

Investors within the FAIRR initiative are already engaging with stakeholders on climate risk. Earlier this year, he coordinated an $ 11 trillion global investor pledge with the fast food industry on its climate footprint, asking six major fast food chains with a market cap of $ 260 billion to reduce the risks of their meat and dairy supply chains by setting ambitious targets. targets for reducing their greenhouse gas emissions. Five of these companies ad they have set or are planning to set science goals.

European abandonment

The EU is committed to reducing carbon emissions by at least 55% by 2030 from 1990 levels and, so far, has submitted a single NDC on behalf of its countries. The food production system of its member states is responsible for 26% of global greenhouse gas emissions, where emissions from livestock account for about half of them.

During the period 2014-2020, the Commission allocated more than a quarter of the Common Agricultural Policy (CAP) budget to climate change mitigation and adaptation. According to the European Court of Auditors (ECA), the external auditor of the EU budget and independent custodian of EU finances, so far the EU has spent half of its climate budget on more agriculture. green, but failed to reduce agricultural emissions. “The role of the EU in mitigating climate change in the agricultural sector is crucial, as the EU sets environmental standards and co-finances most of the agricultural spending of Member States,” said Viorel Ștefan, Member of the Court. European accounts responsible for their last report.

Under current EU rules, each member state decides whether or not its agricultural sector will contribute to reducing agricultural emissions. The absence of clear and binding national targets further discourages climate action by agricultural businesses. As EU agricultural finance for climate action has not helped reduce greenhouse gas emissions, the role of private investors could be crucial.

Investment options

Traditional agricultural methods and practices are responsible for the high amount of emissions emitted by the agricultural sector. Reallocating investments to emission reduction technologies could significantly reduce row crop emissions and make farm management practices more sustainable.

A recent study by Hi genetic fidelity (HFG), a crop breeding company, shows that changes in agricultural practices could reduce greenhouse gas emissions by 70%: “Our aim was to show that with the right investments and the right policies, agriculture can realize its potential to be a leader in tackling the root causes of climate change,” said Philip Benfey, co-founder of HFG.

Researchers found that optimizing the effectiveness of current technologies to reduce nitrogen fertilizer use, which is the largest contributor to row crop emissions, could reduce nitrogen application by 36% allowing achieve a 23% reduction in emissions. Replacing current technology with second generation technologies such as crop genetics, electrical synthesis of ammonia, microbial synthesis of nitrogen, and electrical farm equipment could reduce emissions by 41% over the years. next five years. Carrying out a complete overhaul of the farming practices system could reduce emissions by 71% within 15 years.

As the global and regional regulatory landscape evolves to accelerate sustainable policies across the food system, including laboratory meat production, clear national goals for the food supply sector could lead to a better managed transition .

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