Few farmers consider themselves corporate heavyweights, but the agribusiness sector is realising the whole industry could do itself a big favour by adopting some standardised, corporate-style approaches to environmental, social and governance (ESG) standards, from the paddock to processor.
While agriculture has plenty of credible stories to sell to investors, consumers and the big name brands marketing its food and fibre products, Agribusiness Australia says the industry's clean, green and socially responsible credentials are not always clear or appreciated.
A recent forum of almost 40 agribusiness executives in Sydney identified ag's inconsistent approach to reporting ESG achievements as an increasing risk for the sector, and a missed opportunity.
ESG benchmarks evaluate how well businesses adopt social goals and comply with community expectations beyond their primary focus of making profits and providing services.
In the corporate universe, proof of good ESG goals and achievements is now keenly monitored by shareholder advocacy groups, financiers and world-wise customers who want to support products associated with ethical, environmentally responsible and transparent business habits.
Show the good
"Agriculture uses natural resources every day, and it's expected the industry will show how it uses them appropriately and in the least impactful way possible," said Agribusiness Australia board member and KPMG agribusiness sector director, Georgie Aley.
"We must be able to track progress and improvements to show shareholders and others we are actually doing better - we are decarbonising the planet, treating animals well, or being more socially alert.
"We also need to better communicate solutions we are developing and the great work already being done."
At the Sydney summit the bosses of agribusinesses such as JBS Foods, Bega Cheese, Consolidated Pastoral Company, Australian Country Choice, GrainCorp and CBH Group acknowledged a common language and standards should be adopted to monitor environmental, social and governance issues.
"To unlock capital and drive investment in agriculture's future, the way we build social license, gain more market access and attract funds will depend on meeting stakeholder and consumer expectations," said Elders managing director and Agribusiness Australia chairman, Mark Allison.
"There's a need for a common and consistent ESG language.
It needs to be underpinned by consistent and comparable benchmarks to help us have a fully transparent and traceable supply chain."
Helping $100b goal
A proactive response to ever-increasing community expectations around ESG themes would significantly help agriculture reach its $100 billion production target by 2030, and $300b post-farm gate.
Summit attendees also supported greater industry-wide commitments to carbon emission targets, rather than lumpy goals across commodity sectors.
Commentary from businesses, farmers and others was often inconsistent which meant many important achievements on themes such as decarbonisation, water use efficiency and environmental management, were not well understood by the wider community.
Northern NSW and Queensland cropping beef and hardwood timber plantation business, Sundown Pastoral Company, has embraced the scrutiny which ESG reporting involves, largely because the family company is keen to spruik its carbon sequestration efforts, sustainable farming values and community ties.
"Europe is leading a lot of these environmental and social expectations, and our European customers want us to measure up to those expectations, too," said director David Statham.
"As cotton growers we know a significant volume of the clothing and fabric market involves big textile and fashion names in Italy or businesses like Ikea.
"If our industry can agree on a common calculator to capture soil carbon data, that can send a powerful message to retailers and shoppers about what Australian cotton or grain or livestock producers are doing to help the environment."
Good for business
Annual monitoring proved Sundown's 20,000 hectare Moree property, Keytah, had lifted its organic and soil carbon content, and was subsequently getting better crop productivity, too.
These results were keenly promoted by the Statham's own Good Earth Cotton brand.
The Good Earth name is backed up by the textile industry supply chain traceability process, FibreTrace, which embeds tiny traceable elements in cotton fibre at ginning so it can be tracked all the way to a garment's point of sale.
"The big fashion brands want more and more proof about how and where fabrics are sourced and produced, including what emissions are created in the supply chain," Mr Statham said.
Sound accountability practices via good governance processes not only helped satisfy ag sector customers, they helped businesses large and small anticipate potential risks, said Prime Super chief executive officer, Lachlan Baird.
"If you get governance right, you are aware of what you need to be prepared for on your farm, or in a farm service business, or as a food processor," said Mr Baird, also one of the agri sector bosses at the summit.
"You're likely to understand production issues better, including costs and potential threats like energy reliability.
"If you are good at your job, you'll probably already have fairly good internal governance practices, but you may also need somebody else to be looking out on your behalf, including monitoring what others like the National Farmers Federation or the banks are identifying.
Prime Super manages $6.2 billion in superannuation funds, largely on behalf of rural sector workers.
Mr Baird noted agriculture sector was no stranger to business risk, which, in turn, made many farmers inherently quite good at preparing for tough times, including having strategies to conserve capital or respond judiciously to changing markets or seasons.
"There do seem to be more climate-related issues to deal with these days, but I've got total confidence in the farming sector.
"There have always been big challenges for this industry, but it keeps coming up trumps."
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