The Fairr Sharers

The FAIRR (Farm Animal Investment Risk & Return) Initiative’s network of investors manages over 70 trillion USD in assets from some of the world’s largest companies. Armed with the will and the right information, these investors have the power to demand radical, regenerative change from the corporations ruling the world’s food systems. We asked Sajeev Mohankumar and Max Boucher, co-authors of the first FAIRR Regenerative Agriculture Report, how.

Sophie Lovell: Do you believe in system change?

Sajeev Mohankumar: First of all, I’m grateful that Max is here because he brings the financial/ investor perspective and I have more of a technical background. I have spent around 15 years, looking at agriculture and assessing agriculture mitigation and adaptation, and, yes, I feel that incremental change is important. But I also think, because we are talking about very complex systems involving climate and nature, if we are to meet some of the agricultural and food production goals, there is a need for systemic change.

In order to meet some of these giant climate and environmental goals, there is a need to systematically change or have a paradigm shift in terms of producing food, which is what regenerative agriculture essentially represents. This means moving away from conventional practices because there’s a limit to the incremental benefits that we can gain with conventional production: very soon we’ll hit a wall and won’t be able to meet all the targets.

There’s a limit to the incremental benefits that we can gain with conventional production: very soon we’ll hit a wall and won’t be able to meet all the targets.

Max Boucher: Yes, I think this system change is possible. And I guess in a way there has been a system change already, post-Second World War, when it made financial sense to adopt what became of the food sector. On the other hand, that change will be quite difficult to reverse unless there is a concerted effort to align policy and financial flows and all sorts of incentives for companies and farmers to do things in slightly different ways. It will be a huge task to align this, especially on a global level but I think it’s possible. 

Orlando Lovell: Could you perhaps briefly explain what FAIRR is and why it was set up?

Sajeev: FAIRR is an investor network founded by Jeremy Coller in 2015 to fill a knowledge gap among investors. Although some investors were involved in discussions around animal welfare concerns in animal production, there was no existing organisation raising awareness around the whole spectrum of ESG (environmental, social, and governance) issues involved in the sector, and FAIRR evolved to fill that gap. We work with around 380 investor members and counting. Between them, I believe, they total up to around 70 trillion in assets under management, so it’s quite a big investor base.

We don’t provide investment advice. What we do is help investors with the resources and the knowledge that they need to push their portfolio companies to do the needful on ESG topics. We do that in three main ways. One is we have a protein producer index, which looks at the ESG performance of around 60 of the world’s largest animal protein producers so investors can have an understanding of the ranking and the scores across climate, biodiversity, social, and governance issues of these companies.

What we do is help investors with the resources and the knowledge that they need to push their portfolio companies to do the needful on ESG topics.

The second way is the research team that Max and I sit on, which is set up to research ESG topics within livestock agriculture in response to investor demands and requests for information. We also run collaborative engagements, picking up on topics important to investors and the general community, and then equip investors with assessment frameworks and the knowledge they need to ask companies or bring them to the same table and have a dialogue. We feel that these engagements are important in terms of giving investors the voice to push companies to do the right things. 

The third aspect is the observer policy team. FAIRR is one of the very few organisations that gives investors a voice to influence policymakers. Last year, for instance, we had an investor statement, asking FAO [Food and Agriculture Organisation of the United Nations] to publish an agricultural roadmap to 1.5 degrees C very similar to the one that the International Energy Agency (IEA) did for the energy sector. This year [2023], we have an investor statement for the G20 ministers, for example, to look at repurposing harmful agricultural subsidies. We respond to various consultations on environmental standards and regulations such as SBTi FLAG (Science-based Targets for Forest, Land and Agriculture), TNFD ( Taskforce on Nature-related Financial Disclosures) and TPT (Transition Planning Taskforce), among others to help investors understand and align on disclosures, targets and transition plans.

We feel that these engagements are important in terms of giving investors the voice to push companies to do the right things. 

Max: The one-liner is basically that we try to drive sustainability in the food sector by empowering investors and we do this through all the ways that Sajeev just mentioned.

Orlando: You have just published a report on regenerative agriculture practices or the lack of them amongst some of the world’s largest food producers. Can you explain how you came to this subject and why you focused on these participants?

Max: When we launched our biodiversity workstream a couple of years ago, basically on the back of demand from investors, it became very quickly apparent that when you look at all the drivers of biodiversity loss in the food sector – deforestation, land use change, resource extraction and so on – companies are saying: We have a solution to this, amongst other things, which is regenerative agriculture. Our thinking was: Okay, that sounds great, but what is being done on the ground and what is the status currently in terms of direction of travel and deployment? The idea was to give investors and other stakeholders that baseline of the current state of the market.

The idea was to give investors and other stakeholders that baseline of the current state of the market.

Sophie: The term “regenerative agriculture” was first coined in the 1970s by the Rodale Institute but it’s only really become a buzz term since 2014, or even 2019. Why did you choose the term “regenerative” and not “organic”, which has a far longer more established history as a known term for what the general public might understand to be good practice agriculture?

Sajeev: I guess, at least on the corporate side of things the interest in “regenerative” is there because it has been referenced widely in some of the standards, for instance, TNFD [Taskforce on Nature-related Financial Disclosures], from the biodiversity perspective, references regenerative agriculture, also, the SBTi’s FLAG, has regenerative agriculture elements in terms of the climate targets. From those standards and targets, regenerative agriculture has received a bit of a push because most companies are using that as a device to meet their climate targets or their biodiversity goals. 

At the same time, it fits this back-to-nature concept that companies are now embracing. And it also aligns with a strategic shift in terms of how production has to be perceived. Regenerative agriculture is also by nature very flexible. Some of the other production systems and certifications could create a bit of a barrier for entry to some of these companies, engaging those practices. This is not to say they are bad and regenerative is better but I think regenerative agriculture as a flexible movement creates a bit of leeway for companies to adopt into their supply chains.

I think regenerative agriculture as a flexible movement creates a bit of leeway for companies to adopt into their supply chains.

Max: Carbon capture has been a big driver of the adoption of the term over the last few years as well. Companies set these quite ambitious net zero targets for reducing emissions in their supply chains, which can be up to 80 to 90 per cent of their total emissions and they realised that carbon can be sequestered in soils. One of the big draws of regenerative agriculture is that soil health binds carbon into soils. 

One of the big draws of regenerative agriculture is that soil health actually binds carbon into soils. 

Orlando: What would you say are the key takeaways of your report? What were the most disheartening and most encouraging aspects for you?

Sajeev: The key takeaway is that regenerative agriculture is becoming an important feature in the sustainability disclosures of most companies. Among the 79 companies that we assessed almost 50 of them – around 63 per cent – mentioned regenerative agriculture. Companies are not only looking at incremental benefits or incremental production initiatives, they are understanding the importance of regenerative agriculture in terms of the systemic change they have to undergo in their supply chains and I think that’s really encouraging.

We found four main results from looking at the regenerative disclosures of companies. One of them is that many companies prioritise soil health and carbon capture but leave out the other connected outcomes such as biodiversity, water impacts, farmer livelihoods etc., that are generated from regenerative agriculture and could create certain dangers and trade-offs. So we would like the companies to be more holistic in terms of their approaches to achieving outcomes. 

Companies are not only looking at incremental benefits or incremental production initiatives, they are understanding the importance of regenerative agriculture in terms of the systemic change they have to undergo in their supply chains and I think that’s really encouraging.

Another takeaway relates to some of the regenerative targets and credibility around them. Only 36 per cent of the companies that mentioned regenerative agriculture had a quantifiable target. Without a quantified target for what you want to achieve from regenerative agriculture, it’s very difficult to have any confidence in terms of understanding where you’re going with this.

The third one is that the data and methodologies used to measure, report or track progress were very lacking. Only 16 per cent of the companies had any sort of data and metrics to assess the progress of regenerative agriculture. 

Only 16 per cent of the companies had any sort of data and metrics to assess the progress of regenerative agriculture. 

The last and most important takeaway is that only four out of the 50 companies, eight per cent, had any dedicated funding support for farmers. Farmers are central to this transition, so without supporting them or empowering them in this transition, it will be very difficult to scale this up as a practice. 

Max: I can add a positive thought: Last year at COP 15 in Montréal it was said that we need to invest 400 to 500 billion US dollars globally per year in nature. In terms of the global food system, the companies that we cover spend over two trillion US dollars per year on their ingredients. So if even a fraction of that goes from being quite harmful to the environment to becoming at least neutral, or eventually regenerative it considerably reduces the amount of money that we probably need to get governments and other organisations to bring into the system for nature.

In terms of the global food system, the companies that we cover spend over two trillion US dollars per year on their ingredients.

Orlando: Are we correct in understanding that the figures and the information on which the report is based came directly from these companies and not independent sources? Big Agriculture doesn’t have a good reputation as far as the planet and people are concerned with the general public, not least in terms of their kind of greenwashing practices. Why should we believe the figures given in the report? 

Sajeev: We did not speak to the companies. We looked at the public disclosures of these companies, and it was not from any tertiary source. The data is from the company disclosures and what they put out in their CSR [Corporate Social Responsibility] reports and other agricultural reports. All of these are backed up by analysts’ commentary. We created an assessment framework based on the outcomes, targets, strategy, pilots, data, etc. and then we looked at the disclosures of these companies to understand this.

As we said, regenerative agriculture is very flexible by nature. But this also creates an issue in terms of alignment across different companies, in terms of what they are aiming to achieve, what targets they’re setting, what support structures they have for their targets, data and measurement, etc. 

What we tried to do was provide a framework for minimum due diligence.

What we saw in writing this report was that most companies have their own approach to regenerative agriculture. We did not want to define what that approach should be for the sector because that should be coming from a central organisation that does this kind of work. But what we tried to do was provide a framework for minimum due diligence and see if different regenerative strategies hold up with that. The results show that they do not really hold up in terms of the disclosures, especially when it comes to credibility, data, inclusivity and resilience.

Orlando: We were struck by the phenomenon of “green hushing” mentioned in your report, can you elucidate on that, and also about how unquantifiable and unrigorous many of these corporate regenerative pilot programs seem to be?

Sajeev: Green hushing is something that is becoming more common in terms of sustainability disclosures, not only for regenerative agriculture. Because of the pushback some companies have received on their sustainability disclosures, they are removing some of the information or details from what they put out. Sometimes even if they’re doing the right thing. They’re a bit wary of putting the information out there because they could be challenged – fairly or unfairly.

Because of the pushback some companies have received on their sustainability disclosures, they are removing some of the information or details from what they put out.

In terms of regenerative agriculture, we saw that happen with specific companies that had some sort of original greater plan, which they then removed from the disclosures or the marketing materials. What’s problematic from an investor, or stakeholder perspective, is that this can affect the credibility of these companies.

There is also a question about the rigour of what companies are reporting. I don’t think it’s there, in terms of the claims that are being made. We don’t see the action on the ground substantiating those claims.

There is also a question about the rigour of what companies are reporting. I don’t think it’s there, in terms of the claims that are being made.

Sophie: Could this lack of rigour and standardisation also have something to do with the fact that regenerative agriculture practice on a large scale is quite new to these companies?

Sajeev: It is a new thing, but companies are quite familiar with some of these practices because of the climate commitments they have already made. We do expect to see consistency around some of these elements, especially around target setting. We know companies have set climate targets, so the regenerative targets should be quantified and not just generic statements. Especially given the number of disclosures and amount of marketing they do around regenerative agriculture.

The regenerative targets should be quantified and not just be generic statements.

We would also like to see a bit more consistency in terms of farmer support. Because of the climate targets they have set, there is a need to engage with their suppliers to meet their Scope 3 [from the Greenhouse Gas Protocol] emissions targets. If you have a regenerative programme, it’s very important that you link that up with your other targets and also activate supplier engagement to equip farmers to do the needful. These are things that can be easily done or extended, which we don’t really see coming through clearly, even though companies mention regenerative agriculture.

If you have a regenerative programme, it’s very important that you link that up with your other targets, and also activate supplier engagement to equip farmers to do the needful.

Sophie: It’s a kind of triangle isn’t it, of transparency, disclosure and reputation? 

Max: It’s definitely related, but we are not saying that regenerative agriculture is what should ultimately be reported on. What should be reported on is what we’re trying to fix: climate of course, but also water, nature and just transition.

If we take the example of climate, which is probably the one that’s most easily quantified, we try to see how many companies are at least starting to discuss the contribution of regenerative agriculture as one of several tools that will help us reach our climate targets. Only 24 per cent of the 50 companies that discuss regenerative agriculture in our report are starting to say they want to understand how regenerative agriculture will contribute to their climate targets. That’s what the focus should be on, rather than asking for more disclosure on regenerative agriculture. I believe that’s where the investors at least are going in terms of trying to get companies to put credible and tangible plans in place to reach these targets. Many of them are only six years away now. As an investor, you want your companies to start showing some real commitment and real action on the ground to reach those quite ambitious targets.

Only 24 per cent of the 50 companies that discuss regenerative agriculture in our report are starting to say they want to understand how regenerative agriculture will contribute to their climate targets.

Sajeev: Because it’s an emerging practice, pilot programmes are also a good way to test assumptions and see how they scale up into the wider supply chain. However, only 18 of the companies we assessed have pilot programmes. And even amongst those that had them, it was not very apparent how the learnings could be applied to the wider supply chain. Also, only four companies had baselines to understand where they were currently and what they were trying to regenerate from those baselines. So these are some of the minimum due diligence measures that companies can undertake to ensure that there is credibility in terms of how they’re approaching this and that credibility is vital in meeting climate targets.

Sophie: With 270,000 acres, Bill Gates is the biggest private owner of agricultural land in the US. He is not a farmer or a food company. There is a huge investment focus on buying up agricultural land at the moment. It is being talked about as the biggest land ownership shift in history. For the other 99 per cent, in the context of the effect the previous property boom had on housing, that’s quite a terrifying realisation, I think, especially for those who have been at the wrong end of the property speculation boom. How do we protect the land and the people who live on it from speculation?

Max: This is not something that we specifically cover in the report, but given all that we’ve covered there is the issue of making sure tenant farmers are incentivised. Especially in some parts of the world, tenancies can be quite short – fewer than five years – or certain crops require you to move across farms. If we think about outdoor pork farming, for example, that needs to move regularly, otherwise you build too much nutrient load and too much pollution in one place.

You need to set contracts and incentives for these farmers to deliver regenerative agriculture while taking into account their economic situation.

You need to set contracts and incentives for these farmers to deliver regenerative agriculture while taking into account their economic situation where maybe it’s not in their interest to take the risk of transitioning to regenerative agriculture if they only are going to operate this parcel of land for three or five more years.

Sajeev: Towards the end of the report, when we talk about the path forward for regenerative agriculture we emphasise that it’s a spectrum where you can have, perhaps, farm-level practices at one end and rewilding at the other. Again, we don’t specifically tell people what they should do, but we do reference a couple of measures such as incentivising farmers and what potential financial mechanisms for that could be such as loans, bonds, premium pricing incentives or removing some of the adverse subsidies. So, we do look at the smallholder perspective. And most of these practices are corporate-driven, not farmer-driven. They are also more focused on the Global North, so there are some inequality issues there too.

Most of these practices are corporate-driven, not really farmer-driven. They are also more focused on the Global North…

Sophie: You do say in the report, though, that around 31 per cent of the 911 million acres found in the US is owned by non-operators as an investment, so it is surely part of your report or the role of it to get these people who own this land to take responsibility for it and an interest in what’s happening with it.

Max: Yeah, that’s an interesting dynamic as well. We do talk about how and who benefits, whether it’s financial in terms of carbon capture and carbon credits that might be delivered or biodiversity offset. There will be, I’m sure, places where there’s a conflict between the landowner and the person operating the land and the companies, who are buying the ingredients, they all kind of want the carbon inset in their value chain. So that’s the angle that we touched on in the report.

Sophie: Because your report is talking about this need for structure and regulation, do you think there should be more powerful, more universal global legislation or independent watchdogs and regulations in this area? And if yes, where or who should this come from?

Sajeev: There are a couple of elements to this. One is that the FAO [Food and Agriculture Organisation] is currently coming up with an agricultural roadmap, which I think will be really important to embed the role of some of these practices. Regenerative agriculture is not the only practice that’s needed to transform the agri-food system, there are also other demand-side practices such as dietary shifts, food laws, etc. Everything has to work together. Having some sort of agricultural roadmap or target really helps in terms of embedding this practice and understanding the role of this practice in that transformation.

Regenerative agriculture is not the only practice that’s needed to transform the agri-food system, there are also other demand-side practices.

The other element is having a shared alignment on what the structures the practices, the outcomes and the metrics are. We do reference one initiative called the Regen10 Initiative [a collective action plan by the World Business Council for Sustainable Development to work with over 500 million farmers to scale regenerative food production by 2030] in the report, which is going to come up with a framework in 2024. We are a part of their main working group and sub-working groups on climate and nature initiatives. It’s a coalition of a lot of corporations, independent bodies, some partners like us, NGOs, investors and foundations. This kind of coalition is quite important in bringing together the knowledge and also practical experience implementing these practices.

The other element is having a shared alignment on what the structures the practices, the outcomes and the metrics are.

Another aspect we reference in the report is that policy has to create a favourable environment for this to happen. This could be through the aforementioned incentive-based mechanisms that incentivise the uptake of some of these practices for farmers. The ELMS [Environmental Land Management] scheme in the UK is an example of this. It incentivises farmers to uptake sustainable land management practices. At the same time, we also reference removing some of these perversely harmful subsidies, especially some of the input subsidies around fertilizers because they create entry barriers to behavioural changes towards regenerative agriculture.

Policy has to create a favourable environment for this to happen.

Max: A lot of these things, whether it’s the Montreal-Kunming Global Biodiversity Framework or the Paris Agreement are global goals that are adapted to local context. Especially when it comes to nature. Any regulation or policy that comes into being in the UK, for example – where there isn’t very much biodiversity to speak of – is bound to be quite different from a country like Brazil. So, our investor statements that call for subsidy reform focus on the harmful side of the subsidies and on trying to cut those off. What they should be replaced with was purposely not specified because they will be different on a location basis. I hope that answers your question. 

Sophie: Yes. About a year ago, we published an interview with a regenerative agriculture specialist and former US Senate staffer who’d stepped away from the government policy and agriculture log lobbying system to work with the private sector to try to implement change because she felt the rate of change was too slow and legislation compromised by too many interested parties.

Max: Basically, that’s exactly the purpose of these investor statements that we’re putting out: to give the signal to policymakers that there is a desire for these kinds of actions from them, and that a lot of investors and also companies are thinking about them. At COP 15 in Montreal, there was a strong statement put out by a lot of the leading companies saying they are ready for these kinds of agreements and regulations that will need to come. It’s about communicating the desire for this level playing field and showing that policy can help companies achieve these things.

It’s about communicating the desire for this level playing field and showing that policy can help companies achieve these things.

Orlando: I know it’s only been out for two weeks as we speak, but have you had any feedback from your investor audience on the report?

Sajeev: This report came about because of investor concerns around some of these very specific topics that we have highlighted. So we tried to answer these concerns with quantitative estimates of regenerative disclosures. I believe we were successful and now there is an understanding of the scale and impact of the concerns and we need to resolve them. Concern about credibility was a big one. It’s highlighted in the report quite evidently alongside the farmer support. We did talk about transition support for farmers before, but we did not know whether companies are doing the needful. Now we know they are not so that’s important to be aware of.

We did talk about transition support for farmers before, but we did not know whether companies are doing the needful. Now we know they are not .

We released the entire database and the entire assessment framework along with the detail and commentary on regenerative disclosures of 79 agri-food companies to our investor members. Together with the company tickers they can now map some of these companies to their own portfolio companies and see what they’re doing on regenerative agriculture.

We also provided investors with specific engagement questions that they can use to engage with their portfolio companies on specific topics. This is very important as well.

We provided investors with specific engagement questions that they can use to engage with their portfolio companies on specific topics.

Orlando: What do you hope the same report in five years will show?

Sajeev:  From a personal perspective, I think it’d be great to see many companies make that systemic shift in terms of food production. Not only looking at regenerative agriculture and the production side but also looking at the entire spectrum of value chain solutions, including demand-side changes and also working with consumers; trying to diversify some of their protein intake or the food that they eat, through marketing and investment in that side as well.

In terms of the targets, I’d like to see more clarity on some of the targets set, how that feeds into wider company-level targets, and understand how that scales across different commodities. Are they targeting some of the material commodities or are they targeting biodiversity risk geographies, for example?

We want to see more supplier engagement and support for farmers at the ground level, who are undertaking this change, and helping them de-risk the transition.

And definitely, definitely farmer support: we want to see more supplier engagement and support for farmers at the ground level, who are undertaking this change, and helping them de-risk the transition. We haven’t seen much in terms of financial instruments, or initiatives to empower farmers to undertake this change.

Max Boucher is Senior Manager, Research & Engagements, Biodiversity at the FAIRR Initiative. His focus is on helping investors better integrate nature and biodiversity to investment risk and opportunity assessments, and engage company management on these topics. Before joining the FAIRR Initiative, he spent eight years as an Equity Research Analyst at Bloomberg covering consumer staples and consumer discretionary stocks, later shifting his focus towards ESG and sustainable finance. He is a CFA Charter holder and holds a graduate degree in finance from HEC Montreal.

Sajeev Mohankumar has over 15 years of experience in agrifood, forestry and land sectors. He holds a PhD in Environmental Systems from the University of Graz, Austria, an MSc in Agricultural Economics, and an MEng in Environmental Engineering, both from Purdue University, USA and a BEng in Chemical Engineering from the National Institute of Technology, Jaipur, India. He joined the FAIRR Initiative in 2023 as Senior Technical Specialist in Climate and Biodiversity. Before that, Sajeev worked with an array of international academic and corporate organisations, such as South Pole, Carbon Trust, Rothamsted Research, and the International Council on Clean Transportation (ICCT), helping some of the world’s largest agribusinesses set science-based targets to meet environmental commitments.

The full FAIRR Regenerative Agriculture Report called “The Four Labours of Regenerative Agriculture: Paving the way towards meaningful commitments” can be downloaded here.

Cover image: Dave Hoefler via Unsplash

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