Our key takeaway: The Grantham Research Institute puts it well: “The role of agriculture in the 21st century needs to be reimagined in light of the challenges presented by the urgent need to mitigate and adapt to climate change and prevent the biodiversity crisis from worsening. The transition must centre on the livelihoods of workers, farmers, communities and consumers.” Their recently released report describes the important role the financial sector will need to play - both as a provider of capital to the sector, but also in seeking to drive a systemic response with other stakeholders (including policymakers and institutional investors). Some of the recommendations for the financial sector are particularly helpful for companies to think about too. For instance, looking at scaling up inclusive place-based solutions. A just agricultural transition will only happen if communities are involved in designing and driving it. Another one is the need to develop and embed shared social and environmental indicators, and a third one is the need to take an intergenerational approach. Quite literally, the future of agriculture is at stake. Advancing in a rights-centred way is the way forward.
Annabel Ross, Brendan Curran, Nick Robins and Mark Nicholls released ‘Sowing seeds: How finance can support a just transition in UK agriculture’ (July 2023). This is research conducted as part of the UK-focused Financing a Just Transition Alliance (FJTA) which is convened by the Grantham Research Institute and brings together financial institutions, trade unions, regional bodies, civil society and academia:
- A just agricultural transition: “A critical success factor for achieving a net zero and ‘nature-positive’ agriculture sector in the UK is fairness – in other words, delivering a just transition towards environmentally sustainable economies and societies.” The net zero transition will change the landscape of agricultural jobs in the UK. The Climate Change Committee finds that “by 2030 there will be between 7,000 and 42,000 fewer jobs in livestock farming, but up to 39,000 more in afforestation, and thousands of additional jobs in non-livestock agriculture and peatland restoration.” It will be key to finance a just transition for the agriculture sector. In this just agricultural transition, “farmers and landowners, workers and communities would be adequately and fairly incentivised for protecting biodiversity, reducing emissions and capturing carbon, while producing food sustainably.” The report delves into the range of things that are needed for this to happen, which include “clear and consistent policy frameworks, financial support to deliver public goods, access to knowledge and data, and support in collecting the data needed to demonstrate progress towards sustainability objectives.” There is also “a need for dialogue and consultation, particularly at the local level”, farms “need access to a blend of public and private finance to invest”, and “[m]etrics and key performance indicators will also be essential.”
- Six barriers to address to mobilise the finance needed for a just agricultural transition: First, “A lack of agricultural sector awareness and capacity for change.” Second, “Difficulties for farms in accessing finance.” Third, “Ongoing debate about who pays for environmental and social improvement.” Fourth, “Responding to the diversity of different rural locations.” Fifth, “The need for more and better social and environmental baselining and standards.” Sixth, “Challenges associated with handing farms onto younger generations and providing opportunities for new entrants to the sector.”
- Six recommendations for the finance sector: Based on these barriers, the authors propose six recommendations for action for private finance (particularly for lenders to the agricultural sector.) First, “Put the just transition at the heart of agricultural, climate and nature policy engagement. Build awareness and capacity among finance, policy and agricultural stakeholders on how the social consequences of trade-offs can be managed during the food system transformation that lies ahead.” Second, “Integrate just transition principles into banking relationships, products and assessments for food and agricultural sector customers. Incorporating social risks and opportunities alongside climate and nature/biodiversity considerations will mean more effective long-term decisions are possible.” Third, “Promote wider financial innovation to deliver a just agricultural transition. Sustainability-linked funds, environmental markets and blended finance can be developed to include key performance indicators linked to social outcomes.” Fourth, “Scale up inclusive place-based solutions. A successful just transition for the agricultural sector will involve communities designing and driving strategies that best suit their social, economic and environmental context, while contributing to national objectives.” Fifth, “Develop and embed shared social and environmental indicators that are relevant and useful for progress towards a just transition for farmers, rural workers, suppliers, communities and consumers. Sixth, “Take an intergenerational approach. Backed with supportive policy and a clear sector-level vision, finance providers can better tailor funding opportunities and guidance for new entrants, tenant farmers and succession planning.”