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Understanding The Agricultural Sector’s Role In Climate Pledges

By News Creatives Authors , in Small Business , at October 4, 2021

Jeremy Coller Foundation, Chief Investment Officer of Coller Capital and Chair of the FAIRR Initiative.

As I have been warning investors for some time now, cows are the new coal.

This November, world leaders will meet at the U.N.’s Climate Change Conference (COP26), over five years after the ground-breaking Paris Agreement, to renew their commitments on climate change. Top of the agenda will be how sectors can rapidly decarbonize in order to achieve ambitious net-zero targets before it’s too late to avoid the worst effects of the climate crisis.

However, research shows global food production alone would be enough to put the Paris Agreement’s climate goals out of reach, even if all the other major sources of emissions were closed down.

More specifically, food systems account for one-third of global greenhouse gas emissions — with a big chunk of these emissions being from the production of farm animal-related products, including cows, each year. That is more than three times the quantity of 50 years ago, with meat consumption worldwide expected to increase in the next two years.

This trajectory generates a level of greenhouse gas emissions that is unsustainable.

Despite this, no clearly defined national targets for food systems (like the agriculture sector) have been included in the Nationally Determined Contributions (NDCs) published by G20 countries in the run-up to COP (i.e., the plans in which countries outline the climate action they’ll be undertaking).

If we are to have any hope of harnessing the market to meet the Paris Agreement goals, then governments must “show their work” and make clear what percentage of their climate pledges will come from agriculture.

Without drastic reform, farmed meat will become a stranded asset for investors. The friction point lies with the failure to set transparent plans to address the agriculture sector’s emissions. How can leaders move the needle on this issue without any guidance? 

The NDC Blind Spot

The EU has pledged to cut carbon emissions at least 55% by 2030, and the U.K. by 78% by 2035 (versus 1990 levels), but these targets cannot be achieved without dramatically reducing the emissions of the agricultural sector. More specifically, animal agriculture should be a priority when aiming to reduce emissions. 

Research from my organization found that half of the published NDCs include quantified emissions reduction targets for other high-emitting sectors. For instance, the U.S. specifies the emissions reductions that will come from electricity transformation, Korea outlines the reductions that will come from the shift to renewable energy, and the EU’s NDC specifies the emissions reductions that will come from energy and transport.

It’s therefore hard to accept that zero of these NDCs include similar specific targets for agriculture. A sector that emits more greenhouse gases than all cars, trains and planes put together. When it comes to the climate challenge, agriculture is a clear part of the problem, so why isn’t it a clear part of the solution? 

We Can’t Aim Without A Target

For investors, it’s impossible to aim without a target. As the global regulatory landscape moves to accelerate the low carbon transition, a clear national target for agricultural emissions, which discloses specific targets for emissions reduction in agriculture within or alongside NDC commitments at COP26, will increase ambition under the NDCs and kickstart the managed transition to a low-carbon agricultural sector that is so urgently needed.

CEOs should meet consumer demand for transparency and report on their environmental and health footprint (e.g., by disclosing antibiotics usage across value chains, etc.). In the wake of the Covid-19 pandemic, business leaders must build shock resilience into supply chains and improve their management of pandemic risks. Food companies should consider investing in protein innovation to build economies of scale and diversify their product offerings. In the lead-up to COP26, governments are increasingly focused on climate impacts related to agriculture, so companies should act to address these risks now. Business leaders in the food sector should set science-based targets and develop environmental protection policies to demonstrate awareness of climate and nature risks to investors.

Given the dairy and meat sector’s contribution to global greenhouse gas emissions and forest loss, firms in this industry have a once-in-a-lifetime shot at safeguarding their own value and our precious ecosystems. That begins with clear guidance from policymakers about the exact role this sector will play on the road to net-zero.


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