The FAIRR investor network has conducted a first-of-its-kind analysis into commitments on regenerative agriculture by 79 global food and retail giants, worth over $3 trillion and representing almost a third of the sector – and they’re not making progress.
- 92% (46) of 50 companies that talk publicly about opportunities from regenerative agriculture have not made financial commitments to support farmers in their supply chains to make the switch – including Chipotle, Domino’s and Bunge.
- 64% (32/50) are not backing up their own rhetoric on the benefits of regenerative agriculture (e.g. for climate, biodiversity, soil health) with formal quantitative company-wide targets.
- Investors should be concerned about regulatory risk given anti-greenwash laws in UK and EU. Failure to take action also risks undermining new TNFD framework.
Jeremy Coller, Chair and Founder of the $70 trillion-backed FAIRR network, said: “From soybeans to fish food, the agri-food sector is a significant driver of biodiversity loss and greenhouse gas emissions as it turns commodities into the food on our plates.
“FAIRR’s research shows there are more promises than progress in the agri-food sector. Investors will want to see measurable targets that match companies’ stated ambitions on regenerative agriculture if they are to ensure they don’t fall foul of anti-greenwash regulations.”
FAIRR’s a study of 79 global agri-food firms has found that 50 (63%) publicly refer to the potential of regenerative agriculture as a solution to the climate and biodiversity crises. However, of these 50 companies, 64% (32/50) including Chipotle (NYSE: CMG), Domino’s (NYSE: DPZ) and Bunge (NYSE:BG) have not put in place any formal quantitative company-wide targets to achieve those ambitions.
Only 4 of these 50 (8%) companies have set financial targets to support farmers in their supply chain to incentivise the uptake of regenerative agriculture, Nestlé (OTC:NSRGY), PepsiCo (NASDAQ: PEP), and JBS (BVMF:JBSS3). And of course JBS has recently come under fire from NGOs regarding failures across its supply chain. Sodexo (PARIS:SW)’s Good Eating Company will dedicate 15% of its food budget to regenerative agriculture. Small donations to specific projects are excluded from these figures.
There are some examples of positive action but more is needed
The report highlights several positive examples of regenerative commitments made by leading companies across the agri-food value chain. For example, Danone committed to sourcing 30% of key ingredients from farms transitioning to regenerative agriculture by 2025; General Mills (NYSE: GS) to implement regenerative agriculture practices on 1 million acres of farmland by 2030; and Walmart (NYSE: WMT), through a collaboration with PepsiCo (NASDAQ: PEP), has set a target to eliminate 4 million tonnes of greenhouse gas emissions through its regenerative agriculture programme.
However only 63% (50/79) of analysed companies explicitly discuss ‘regenerative agriculture’ in public reporting – and only 36% of these firms (18/50) have put formal quantitative targets in place.
What’s worse is that only 8% (4/50) of companies that publicly report on regenerative agriculture as an opportunity have financial commitments in place to support farmers in their supply chain to incentivise uptake of regenerative agriculture.
Lack of agreed definitions is hindering progress
The research, undertaken by FAIRR, a network supported by investors with over $70 trillion in combined assets, found that with no internationally agreed definition of ‘regenerative agriculture’ considerable variation occurs in how companies describe its benefits.
There is no agreed definition of ‘regenerative agriculture’ nor the outcomes companies are looking to address through regenerative agriculture. FAIRR’s analysis found that ‘soil health’ and ‘carbon-related’ outcomes were the two most cited sustainability outcomes.
These were followed by ‘improving water use and quality’, ‘biodiversity’ and ‘reduced use of agrochemicals’. Social outcomes related to farmer incomes, just transition and other economic themes (often referred to as livelihood in corporate disclosures) were the least cited.
This lack of a clear definition makes regenerative agriculture claims hard to substantiate, creating significant risk in terms of incoming regulation and changing reporting frameworks.
The changing regulatory environment is creating new risks to the sector
The incoming EU Green Claims Directive, due to come into force in 2026, will put the onus on any food company marketing in the EU to substantiate claims such as those on regenerative agriculture, with the penalty for non-compliance reaching up to 4% of annual turnover.
Similarly, new guidance from the UK Advertising Standards Authority (in effect in 2023) stipulates that any environmental claims must be fully verifiable and substantiated.
Earlier in September 2023, some of the biodiversity risks that regenerative agriculture is designed to mitigate – including nutrient pollution, loss of pollinators and poor soil health – were named as key risks food companies should report against in the new, finalised Taskforce on Nature-related Finance Disclosures (TNFD) framework. Companies must be able to substantiate how they manage nature-related risks and opportunities, as well as their impacts on nature.
Shipra Gupta, Investments Stewardship Lead at Scottish Widows, said: “As responsible investors, we are committed to actively engaging – directly, collectively and through our investment managers – with companies to establish clear, attainable targets for integrating regenerative agriculture practices into their operations. We also work with companies to influence their supply chains, to align with global climate and biodiversity goals. This approach isn’t just about environmental stewardship; it’s about bolstering credibility.”
Alessia Lenders, Head of Impact, SLM Partners, added: “Regenerative agriculture can build resilience to climate change, improve soil health, and make land management sustainable in the long run. It can also unlock financial opportunities for farmers through premium pricing on regenerative products and reduced input costs. Supporting farmers through this transition is crucial as farmers are ultimately the ones who can deliver positive outcomes to soil health, climate, biodiversity, and water.”
SGV Take
It’s encouraging that two-thirds of the sector now report ‘regenerative agriculture’ as a way to mitigate the damage to the environment cause by industrialised agriculture, but it remains a significant concern that only a third of these companies have implemented formal targets to institutionalise the take up of regenerative practices in their supply chain.
Regenerative practices can support emissions reduction, enhance soil health, and secure food production for generations to come. As recognition of the interconnected nature of the climate, nature and biodiversity systems continues to grow both physical and transition risk are going to accelerate, for companies in the sector and for investors as well.
