With close to 8 billion people, this planet has a lot of mouths to feed. Population projections from the United Nations have that number reaching 9.7 billion people by 2050. The food and agriculture industry, tasked with satisfying our appetites, faces challenges as we demand an increasing output from it.
Analysis from the U.N. Food and Agriculture Organization (FAO) finds that 31 percent of human-caused GHG emissions come from the food and agriculture industry. With the projected population growth, there will be further strain put on the planet to provide enough food for its inhabitants.
Calls are growing louder and more persistent for companies in the food and agriculture industry to responsibly manage environmental, social, and governance (ESG) issues. And businesses are recognizing the need to clean up the negative impacts of their industry. “Food and agriculture is the number one industry where I’m seeing the most [ESG] interest from businesses, hands down,” says Molly Gray, senior account executive at FiscalNote and Equilibrium.
Impacts of the Food & Agriculture Industry
FAO cites deforestation, livestock manure, and energy use derived from fossil fuels as causes of the food and agriculture industry’s high carbon footprint.
Other harmful effects of the world’s food systems include:
- High water use
- Chemical pollution of land and water sources (fertilizers, pesticides, etc.)
- Degradation of natural habitats
- Loss of biodiversity
- Soil degradation
Each of these issues stands to be exacerbated by a growing population if organizations in this sector don’t take action.
Making the Industry More Sustainable
Food production and distribution practices must be improved to meet the demands of a growing population. Here are a few options organizations are exploring to reduce the negative impact of the industry.
Modern agricultural practices can be harmful to the soil and environment. The land is pushed to its limits to produce the greatest yield per hectare, and practices like monocropping and overfertilization lead to soil degradation, impacting future crop growth and making the land prone to natural disasters.
Regenerative agriculture is a land management technique with a holistic view of the farm and its environment. There is no one-size-fits-all approach to regenerative agriculture; it is a philosophy centered around improving the health of the soil using many different methods. Techniques can include no-till farming practices, increasing crop diversity, composting, cover cropping, reducing chemical inputs, and managed livestock grazing.
Technological advancements are another way companies in the food and agriculture industry can improve sustainability. From drones to weather sensors to data tracking software, masses of tech companies are getting into the agriculture sphere as companies contend for a piece of the pie. Data from Crunchbase shows that a record $4.9 billion was invested in ag-tech startups in 2021.
“Today, farmers can access new technology that allows them to get deeper insights into how their farm operates,” explains Adrian Ferrero, CEO and co-founder at Biome Makers. Ferrero’s ag-tech company uses a DNA-sequencing program to help farmers better understand their soil biology.
“New technologies can provide reliable data and help farmers make vital agronomic decisions, allowing them to optimize their farm costs and ensure the health of the land for generations to come,” Ferrero adds.
Making changes in the way organizations do business is crucial to ensure the long-term sustainability of the planet. Organizations need a way to measure and track progress as they move toward being more sustainable. ESG reporting helps food and agriculture businesses monitor their progression and communicate to their consumers, investors, and business partners that they are serious about sustainability. Recently, there have been additional reporting standards and guidance for the agriculture sector, including specific agriculture guidance under the Science-Based Targets Initiative (SBTi) and a new sector-specific agriculture standard from the Global Reporting Initiative.
Difficulties in ESG Reporting
One of the major obstacles to ESG reporting is that there is no industry standardization. Definitions, methods, and materiality differ between companies and rating systems. Not knowing what you need to report makes it almost impossible to know where to start.
This has accelerated the calls for standardization in ESG reporting from consumers and investors. “Eighty-nine percent of investors surveyed said they would like the reporting of ESG performance, measured against a set of globally consistent standards, to become a mandatory requirement,” says Steve Varley, global vice chair of sustainability at EY.
Companies are under pressure to clean up their act, but without a standardized method for reporting, they find themselves with a lack of direction. Even when you know what you need to report on, getting that information can be just as difficult.
“In food and agriculture you have a lot of vendors, and the lack of transparency in their supply chains is a huge struggle for businesses,” Gray says. Combine this with the lack of standardization and it’s no wonder that organizations have been postponing their ESG reporting.
The most important thing in reporting, however, is to start. “You can do a little bit at a time and just keep chipping away at it,” Gray advises. “Aim for progress, not perfection.”
The confusion surrounding ESG reporting makes it difficult to know where to begin. This is where FiscalNote ESG solutions can help businesses find the right track to sustainability.
Equilibrium’s team of ESG experts has experience guiding organizations through all aspects of ESG reporting. “When we start asking businesses those specific questions, there’s a sense of relief that they’re not alone — we’re here to help,” Gray says.
In the confusing world of ESG reporting, speaking with field experts can provide clarity on how to turn your business from a sustainability laggard into an industry leader. Learn more about how Equilibrium and FiscalNote ESG Solutions can help you stay ahead of ESG disclosure, reporting, and risk management across your entire value chain.