Agriculture in transition - A new 'Net Zero' focus?

COP26 saw a welcome recognition of the importance of nature and its relationship to climate change.

Urgent action on land use is needed as demand for food increases, while the world is currently losing forests, damaging soils and rapidly destroying other ecosystems that play a critical role in absorbing carbon and cooling the planet.

As commitments to action proliferate, could it be collaboration in big business that leads the way?

The IPCC has estimated that 23% of global GHG emissions are associated with land use, including 11% of global GHG emissions from deforestation and the conversion of natural ecosystems.

One of the more salient discussion points at COP26 was the need to establish more sustainable food systems, as changes in temperature and weather patterns can disrupt supply chains, affect productivity and lead to higher commodity pricing.

Many promising announcements were made at COP26 regarding the importance of deforestation – for example 100 world leaders representing 85% of forest coverage pledged to halt and reverse deforestation and land degradation by 2030.

Twenty-eight governments announced commitments via the Forest, Agriculture and Commodity Trade (FACT) Dialogue Roadmap for Action, which called for governments to increase sustainable agri-commodity trade while protecting forests and other critical ecosystems.

A few days later, forty-five governments led by the UK pledged urgent action and investment to protect nature and shift to more sustainable ways of farming at the COP26 Nature and Land-Use Day.

But how exactly is such rhetoric going to be turned into action?

There are a lack of positive incentives to encourage sustainable agricultural practices, which is highlighted by the fact that in the last decade roughly 40 times more finance flowed into destructive land-use practices rather than forest protection, conservation and sustainable agriculture combined.

There are other challenges around market leakage, lack of transparency and traceability, sensitivity around food pricing and affordability and, of course, market concentration and the power dynamics between global market players.

The problem with commitments to deforestation or sustainable land-use is that if the structure of the economic system is focused on exploitation of resources on a purely short-term financial basis, it can be difficult for policymakers to successful implement effective change or for financiers to use their money effectively.

The Food and Land Use Coalition (FOLU) has estimated that if the world’s 500 largest companies committed less than 0.1% of their total revenue and less than 1.5% of their total profit to large-scale investment in nature per year, this would be enough to save the forests on which all life on earth depends.

It could be that the structure of the market itself and its disaggregation that are the biggest barriers - which makes the net zero commitment of ten major agricultural commodity players a potential game changer.

Net zero commitments can be a problem, which we’ve seen at a country and a company level. Questions abound regarding the time frame, the baseline, the extent to which offsets will be used.

As different sectors wake up to the social and economic challenge of climate change and commit to emissions reductions, it is going to become increasingly important to have a transparent understanding of which companies are taking effective action, which are talking a good line while not doing much and which are still ignoring market signals.

So what we need to see in the agriculture sector is clear action that will enable a better understanding of where emissions and resource dependencies arise, and the most effective ways to tackle them.

One of the challenges faced by many net zero commitments is the enormous importance (and lack of understanding) of the supply chain, or scope 3 emissions. One company’s scope 3 emissions are another company’s scope 1 or 2 so the important thing is to create understanding, alignment and action. That is the potential on offer by the commitment of large commodity companies to the 1.5°C pathway, with plans to create a sectoral pathway by COP27 in Egypt.

The ten companies who have come together– ADM, Amaggi, Bunge, Cargill, Golden Agri-Resources, JBS, Louis Dreyfus Company, Olam, Wilmar and Viterra – manage large global trade volumes in key agricultural commodities, including more than half of both Brazilian soy exports and global palm oil trade - both of which are known to be significant drivers of deforestation.

When governments, business, civil society, philanthropy, science and innovation come together, it can create unprecedented change.

Global commitments to deforestation are going to lead to systemic shifts in finance, trade in agricultural priorities and the rights of local communities and indigenous peoples. But it is by leveraging the actions of corporations on the ground, and encouraging collaboration across supply chains and even between competitors that we will be able to build a more sustainable path to the future.

Source: Abridged article by Felicia Jackson first published in Forbes