Watch our interview with Sofía Condés, Head of Investor Outreach at FAIRR
THE FAIRR Initiative is an investor network that raises awareness of the environmental, social and governance (ESG) risks and opportunities in the global food sector. The network has over 370 members globally, representing over $70 trillion in combined assets. Members include JP Morgan, BlackRock, Morgan Stanley, AXA Investment Managers, Federated Hermes, Barings, HSBC and many more.
In light of the recent Global Biodiversity Framework, FAIRR has called on the G20 Finance Ministers to repurpose their agricultural subsidies in line with climate and nature goals.
The alliance is calling on the G20 Finance Ministers to uphold their commitment to reform agricultural subsidies so that countries can meet their net-zero greenhouse gas emissions commitments by 2050 alongside meeting their commitments to global biodiversity and nature goals.
FAIRR says that “Biodiversity loss is already having a material impact on economic activity, and it is estimated that nearly $44 trillion dollars of economic value generation are dependent on ecosystem services, which translates to over half of global GDP.
“Under Target 18 of the Kunming-Montreal Global Biodiversity Framework (GBF) G20 countries agreed to ‘identify by 2025, and eliminate, phase out or reform incentives, including subsidies, harmful for biodiversity in a proportionate, just, fair, effective and equitable way’.”
Realigning subsidies with climate and nature goals also has the potential to improve the fiscal outlook for countries by reducing the strain on government budgets. Governments currently provide nearly $500 billion per year of agricultural support, which is price distorting and environmentally and socially harmful. Subsidies are pivotal in determining how land across the world is utilised and which commodities are produced.
FAIRR says that “‘Harmful’ subsidies are incentivising the over-production and over-consumption of certain high-carbon agricultural products, and the damage caused to nature by subsidy regimes has been estimated at $4tn to $6tn per year.
“The repurposing of subsidies aligns with government, multilateral, and private sector commitments and efforts to transition to reach net zero and protect and restore nature by 2050, and is essential for investors with a long-term investment horizon.
“This call is in keeping with the tone of the G20 Bali Leaders Declaration which promoted the need for ‘aligning private and public financial flows with biodiversity objectives’.”
FAIRR’s recommendations to the G20 Finance Ministries include:
- Use measurable, performance-based conditions to deliver financial support to member states and farmers in proportion with the cost of delivering public goods or environmental service
- Shift incentives that prioritise yields of certain products at the expense of the climate and environment and balance this with new monetary incentives that put a value on sustainable agriculture
- Decouple support from production metrics for single commodity transfers with high associated greenhouse gas emissions, and
- Increase available funding for Just Transition Mechanisms or funds to unlock the necessary finance to support affected stakeholders who are impacted by reforms.
Watch our interview with Sofía Condés, Head of Investor Outreach at FAIRR