Dive Insight:
Companies have varied definitions of regenerative agriculture, and investors have struggled to substantiate corporate sustainability claims without a legal or regulatory consensus on the term. And as more countries begin to crack down on empty climate promises, it will become more imperative for food companies to get serious about their sustainability pledges.
Regulators in the U.S., U.K. and European Union are either considering or moving forward with more stringent climate disclosure rules and penalties. In the EU, companies could face a fine worth 5% of their revenue and open themselves up to litigation if they cannot substantiate their climate claims by 2026.
“The multinational food giants have filled endless press releases with talk of their commitment to regenerative agriculture, but with no agreed definition of the term, it’s impossible to measure what progress they’re making or hold them to account for failing to keep their promises,” said Jeremy Coller, FAIRR chief investment officer and managing partner at Coller Capital, in the investor report. “A failure to define and deliver on promised change could soon prove very costly indeed.”
Without a formal definition of regenerative agriculture, some companies have shied away from making it a central part of their sustainability plan. Mars, for example, mentions regenerative agriculture as part of its plan to reduce emissions but excluded it from its emissions targets due to challenges with measuring and monitoring.
FAIRR represents a network of more than 370 investors managing over $70 trillion in assets. The group’s analysis looked at some of the biggest companies in the food and agriculture sector, including Bunge, ADM, Mondelēz International, Tyson Foods and Kellogg.
Companies should look beyond just regenerative agriculture to address the food system’s impact on climate change and employ a variety of solutions, FAIRR said. Increasing nutrient efficiency or upgrading machinery may only provide incremental benefits, FAIRR said, but they are lower risk to farmers and easier for companies to report outcomes.
Beyond small steps, the agri-food sector needs to consider transformational changes including the reduction of food waste and addressing existing consumption and production practices. “Regenerative agriculture has the potential to support such a paradigm shift, but on its own cannot fix our food system,” according to the report.
SOURCE Food Dive.