A major collaborative investor network group has urged the wealthier countries from the G20 group to align agricultural subsidies with their climate goals by the end of the decade.
FAIRR, a group launched in 2016 composed of 32 investors managing around £5.7 trillion in assets, including Britain’s largest asset manager Legal & General Investment Managers and the fund arm of BNP Paribas, announces their first ever call to the wealthier countries’ finance chiefs prior to the G20 summit set to take place in India next month.
The intervention follows a smaller request to the European Union in 2021, amid concerns about the risks to investment portfolios of inaction, and comes following a UN report which revealed that 87 per cent of the $540 billion in total annual subsidies to agricultural producers included measures that were potentially harmful to nature and human health, and price distorting.
A landmark UK Government report, the Dasgupta Review, also found that subsidies caused $4-$6 trillion in damage to nature each year. At COP15 in December last year, a global deal was struck to tackle the issue and preserve biodiversity, including the reform of subsidies.
Helena Wright, policy director at the FAIRR Initiative, noted the importance of richer countries acting urgently.
To address the issue further, FAIRR called for governments to link their financial support to the sector with their environmental obligations, including the Paris Agreement on climate change and the pledge to protect biodiversity.
Laimonas Noreika, CEO of co-founder of HeavyFinance, commented: “As we look ahead to COP28 and the global roadmap for the food supply chain, it’s vital to see such a collaboration of major influential bodies advocate for aligning agricultural subsidies with climate goals, especially as we know agriculture is a significant contributor to global greenhouse gas emissions, accounting for approximately 20 per cent of total emissions.
This unified effort demonstrates a powerful commitment to tackling global challenges through financial influence. As the urgency of climate change and environmental degradation continues to mount, initiatives like these are instrumental in driving much-needed change.”
FAIRR also called on governments to shift incentives to focus on sustainable agriculture; remove subsidies from products such as red meat or dairy, with a high impact on climate-damaging emissions, and increase funding to help workers impacted by the switch.
“The magnitude of this challenge necessitates swift and coordinated action, particularly from wealthier countries who can access the likes of Article 9 funds and provide farmers with services such as Green Loans, the potential of which cannot go undervalued. Green loans, specifically designed to fund environmentally friendly projects, can enable farmers and agricultural businesses to adopt innovative practices that reduce their ecological footprint and Article 9 funds, which promote sustainable and responsible investment, can channel resources towards projects that align with climate and nature goals.” Noreika added.
“By incentivising sustainable agricultural practices and redirecting subsidies away from products with high climate-damaging impacts, we can make a significant shift towards more eco-friendly and resilient food systems.”
“As we progress collaborative efforts like this, which brings together investors, governments, and international organisations, it holds the promise of creating a more resilient and sustainable future for all. This transformation marks a pivotal stride towards addressing pressing climate and environmental challenges.”
FAIRR successfully lobbied the U.N.’s Food and Agriculture Organisation to create a global roadmap for the food sector out to 2050, with its results due to be released at COP28 in November.
A call for G20 nations to disclose targets to reduce agricultural emissions in their national net-zero plans was also picked up by the COP28 hosts two years ago, who are now asking governments to sign a declaration that includes such a pledge.