Is ESG a golden opportunity for grains?
There is still much confusion about ESG and sustainability. These terms are often used interchangeably. This month, I attended the Australian Farm Institute (AFI) ESG Goals and Target Setting conference in Adelaide to look at some of the industry perspectives on ESG in farming.
What is ESG?
ESG stands for Environmental, Social and Governance. These 3 pillars in ESG frameworks represent the topic areas on which companies are expected to report. The goal of ESG is to capture all the non-financial risks and opportunities inherent to a company's day to day activities.
What is Sustainability?
Sustainability consists of meeting the needs of current generations without compromising the needs of future generations, while ensuring a balance between economic growth, environmental care and social well-being.
The conference was opened by AFI CEO Richard Heath, who looked at the role of ESG goals in sustainable agriculture. Acknowledging that many farmers are nervous about the ‘unstoppable force’ of ESG, he outlined the benefit of ESG in guiding investment into a sustainable future and the opportunities that it could foster. According to Richard, ‘achievable but ambitious’ ESG goals for agriculture could mean good prospects for Australian growers.
Keynote speaker Rosemary Deininger, Deputy Secretary, DAFF pointed out that according to the recent ABARES report comparing agri-environmental measures across the world, Australian farmers are doing a good job. In the current landscape, sustainability credentials are becoming a premium global trading currency and Australia is well-positioned to capitalise on these opportunities. It does, however, count on sector sustainability frameworks, being ‘transferred into action.’
We also had the opportunity to hear from expert panellists in the form of a Great Debate on the concept of ESG being an unnecessary burden for farmers. While it was interesting to see a structured discussion of the subject, the real takeaway came to us in the form of a further follow-up question: Is ESG just another onerous system of rules, or a golden opportunity?
While ESG might feel like a new buzzword, it's steadily becoming an important and powerful reporting practice, with companies around the world starting to implement goals and targets for ESG. Certain markets like the EU, UK, and New Zealand have already enacted climate disclosure laws, while the US SEC is set to announce its own ruling in October this year. The Australian government plan to introduce mandatory ESG reporting requirements for large Australian entities in the next few years.
Our agriculture industry is doing a great job overall, but meeting ESG requirements is still a lofty goal for many. However, there’s plenty of appetite amongst farmers for even further work in this space. And as a grains industry, we are highly adaptable in the face of challenging farming conditions.
This meeting was a great opportunity to look at some of the major concerns around ESG measuring and reporting and ways of seeing how ESG disclosures can showcase and build on the credentials of Australian grains.