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ESG in Agriculture

ESG programs for agriculture

In today’s world, environmental, social, and governance (ESG) is a core pillar of value creation for organizations of all sizes. Due to an evolving set of expectations from stakeholders and pending regulatory requirements, ESG is no longer a discussion—it’s a necessity.

On an environmental risk scale, the agri-food industry is considered an at-risk sector. Balancing food production and profitability with ESG imperatives will be increasingly important in the foreseeable future.

ESG issues specific to agriculture

Every industry has different driving forces behind the development of ESG programs. The following issues are material to the agriculture sector:

Agriculture and forestry are the largest greenhouse gas (GHG) emitting sectors after energy. Focusing on GHG emissions in the food system, these risks arise due to agriculture and land use, storage, transport, packaging, processing, retail, and consumption.

Organizations are implementing sustainable procurement criteria into their supplier chain management including codes of conduct, outlining guidelines concerning responsible sourcing, human rights (i.e., forced labour, child labour), and the environment. The agriculture sector needs to consider these criteria to demonstrate appropriate governance of suppliers and meet stakeholder expectations. Another key element of supply chain management covers the implementation of diversity and inclusion criteria as part of their supplier code of conduct. The agriculture sector must ensure diversity in sourcing, suppliers, and logistics to maintain its customer relationships. 

Upcoming regulation on public companies to disclose and report on their Scope 1, 2, and 3 GHG emissions will put pressure on the entire supply chain to map out their carbon footprint.

The agriculture sector will need to innovate its business model to integrate sustainability into its operations. One way is to promote the adoption of regenerative supply-side practices. This could include biological sequestration by the use of no-till farming practices or enhanced crop rotations.

Benefits of investing in ESG programs for agriculture:

Early integration of an ESG program strategically positions your organization for long-term success
Access to capital, including government incentive programs specific to the agriculture sector.
Safe and sustainable operations
Maintain current client base.
Supply chain optimization considering ESG imperatives.
Talent attraction and retention
Operational efficiency and innovation
Partnership opportunities and community impact

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