A NEW Grantham Institute report aims to increase understanding across the financial sector of how it can support a just transition in agriculture. This can be achieved by mobilising more finance towards companies committed to and making progress to support a ‘just nature transition’.
The Institute defines this transition as one that delivers decent work, social inclusion and the eradication of poverty in the shift to a net zero and climate-resilient economy that simultaneously delivers biodiversity goals in agriculture, forestry, land-use and the oceans.
The report says that “It is widely recognised that the agricultural and food system needs a transformation to ensure that sustainable development goals are met. This is true globally and in the UK. The war in Ukraine, the surge in inflation, the accelerating climate and biodiversity crises,
deepening inequalities, and, for the UK, the rethinking of government policies post Brexit, all point to the need for deep-rooted change across agriculture and food, with no time to lose.
“Government policy is a vital component of the agricultural sector’s viability but the finance sector has a critical role as a provider of capital to the entire food and agricultural system. It can use its relationships with food retailers, processors and suppliers to drive a systemic response to social impacts and sustainability targets.
“The research and dialogue brought together in this report point to the just transition as a positive approach to addressing interlocking and systemic challenges. In identifying the barriers that face the agriculture sector and the related financing models, this report has taken a people-centred approach to suggest ways in which the financial sector can work with farms and rural workers, communities, food manufacturers and retailers, policymakers and regulators to better support a just transition in UK agriculture in the face of climate change and biodiversity loss.”
A summary of the report’s recommendations for the finance sector:
1. Put the just transition at the heart of agricultural, climate and nature policy engagement. Build awareness and capacity among finance, policy and agricultural stakeholders on how the social consequences of trade-offs can be managed during the food system transformation that lies ahead.
2. Integrate just transition principles into banking relationships, products and assessments for food and agricultural sector customers. Incorporating social risks and opportunities alongside climate and nature/biodiversity considerations will mean more effective long-term decisions are possible.
3. Promote wider financial innovation to deliver a just agricultural transition. Sustainability-linked funds, environmental markets and blended finance can be developed to include key performance indicators linked to social outcomes.
4. Scale up inclusive place-based solutions. A successful just transition for the agricultural sector will involve communities designing and driving strategies that best suit their social, economic and environmental context, while contributing to national objectives.
5. Develop and embed shared social and environmental indicators that are relevant and useful for progress towards a just transition for farmers, rural workers, suppliers, communities and consumers.
6. Take an intergenerational approach. Backed with supportive policy and a clear sector-level vision, finance providers can better tailor funding opportunities and guidance for new entrants, tenant farmers and succession planning.
The research was conducted as part of the UK-focused Financing a Just Transition Alliance (FJTA), which is convened by the Grantham Research Institute and brings together over 50 financial institutions, trade unions, regional bodies, civil society and academia.
Read the report – Sowing seeds: How finance can support a just transition in UK agriculture