Maria Lettini, Executive Director at FAIRR Initiative, says governments must redirect farming subsidies to support private sector efforts toward sustainable agriculture.
“Like serving cigarettes at a lung cancer convention.” That was Animal Rebellion’s assessment of the menus served to delegates at the COP26 summit where 60% the dishes included meat and dairy.
The activist organisation was attempting to highlight the uncomfortable mismatch between ongoing government subsidises to intensive farming – which an IPCC report says was responsible for 31% of all greenhouse gas emissions in 2019 – and multilateral efforts to set net zero targets for greenhouse gas emissions.
Having just returned from the summit, Maria Lettini, Executive Director at the Farm Animal Investment Risk and Return (FAIRR) Initiative, an collaborative investor network supported by US$45 trillion in assets under management, agrees that there is a disconnect between government rhetoric and active policymaking.
“Some countries are being more flexible but we not seeing as much engagement on managing agriculture’s impact on climate change as we’d like,” she says.
Lack of commitment
Lettini notes the complete absence of targets to reduce emissions from the agricultural sector in the 16 nationally determined contributions (NDCs) submitted by G20 nations ahead of COP26.
This is a particularly jarring omission when compared to the 50% of NDCs with specific targets for the energy sector.
“There is an obvious lack of targets to reduce emissions in the agriculture sector which is concerning considering the impact this sector has on global emissions. NDCs are include specific targets for the energy sector, but we are yet to see that for agriculture,” she says.
However, Lettini says there is a willingness from emerging market country representatives to include agriculture targets in their NDCs. This has come as a surprise since many of these nations have the most ‘skin in the agriculture game’.
“I spoke with a number of delegations on the emerging market side who wanted to acknowledge agriculture as an issue. They are the ones to have the most to lose [from a green transition] because in some cases, jobs are in agriculture are almost double that of those in the developed world. There is a huge food security issue and a huge job and income inequality issue too. That is why deciding how governments are going to incentivise change in the sector is the important next step.”
Lettini was also disappointed by the reluctance from the Russia and China to join the US, UK and EU in supporting a reduction in methane emissions by 30% from current levels.
“[Methane reduction] wasn’t part of the formal negotiations but this is an important topic because livestock produces a significant proportion of methane emissions. That is another big part of the reason that agriculture needs to rise up the policymaking agenda.”
Lettini was more positive about the outcome from Nature and Land Use Day, which came at the end of the summit’s first week.
Twenty-six nations set out new commitments “to change their agricultural policies to become more sustainable and less polluting, and to invest in the science needed for sustainable agriculture and for protecting food supplies against climate change”.
These include Brazil’s plan to scale its ABC+ low carbon farming programme to 72 million hectares, saving 1 billion tonnes of emissions by 2030, and the UK’s pledge to engage 75% of farmers in low carbon practices by 2030.
The UK also announced a £500 million injection for the Forest, Agriculture and Commodity Trade (FACT) Roadmap, in which 28 countries are ‘working together to protect forests while promoting development and trade’.
Lettini says: “Maybe I am optimistic or perhaps naive, but these are really important initiatives. If you have leaders of countries that represent 85% of the world’s forests providing huge amounts of public financing this makes a massive difference.”
Given FAIRR’s focus on mitigating climate change and other sustainability risks in farming and agriculture, it is no great surprise that Lettini welcomes a statement of purpose made on 2 November by 10 global food sector companies. With a combined annual revenue of almost US$500 billion producing commodities including soy, palm oil, cocoa and cattle, the firms declared a shared commitment to “halting forest loss associated with agricultural commodity production and trade”.
She adds: “What was interesting about COP26 announcements was the commitments from both public and private sector money to eradicating investment in deforestation. And we are not talking small numbers; there are trillions of dollars backing that.”
Among those companies pledging support is JBS, Brazil’s largest meat producer, which recently saw Nordea Asset Management – a FAIRR signatory – divest from the company over concerns about its contribution to global deforestation.
Lettini says: “Investors use divestment as a means of last resort, but it sends a clear signal to the market. When Nordea divested from JBS as part of deforestation plans, they had tried to engage with management and were not happy with responses they received. We may see more of this divestment approach in the coming years.”
JBS has since committed to net zero GHG emissions by 2040 and has announced a zero tolerance for deforestation. To guarantee this same control over the suppliers of its suppliers, JBS has set up its Transparent Livestock Farming Platform, which uses blockchain technology for security and confidentiality. By 2025, JBS says it only buy from producers on the platform.
Lettini says this is a sign of things to come.
“We are going to see a lot more competition in the market and the greater use of technology and innovations that substantially change the agricultural markets.”
“Light at end of tunnel”
Lettini would also like to see more investment in alternative proteins and cites the significant progress made by the 60 companies listed in FAIRR’s Protein Producer Index, which assesses ESG risks of the largest meat, dairy and farmed fish producers.
“There is a little light at end of tunnel. When we first produced the index four years ago, there were just four of the meat, fish and dairy producers with some kind of veggie line or plant-based protein products. Now over 50% of the index companies have either financed research and development into plant-based foods or are buying sakes in alternative protein businesses.”
However, Lettini concludes that all this effort from the private sector will only be impactful if supported by government diverting subsidies away from intensive farming towards more sustainable practices.
She says: “Investors and companies can’t do it alone; we need to redirect subsidies. That is the most important part of this equation. It goes back to protecting the farmers and remembering that their livelihoods and the future of the planet are at stake.”