In a world where environmental concerns and regulations are rapidly increasing, we expect to see increased scrutiny on the sustainability of our agricultural system. With this, we envisage a transition to more sustainable practices to better manage the environmental impacts, from climate change to biodiversity. Moreover, given the extent to which we exceed current planetary boundaries in the production of food, drastic changes are required. Complex supply chains will have to adapt, while companies offering solutions such as precision technology or nature-based products may be well placed to facilitate this.
There is evidence that regenerative practices – whose aim is to restore soil health, which owing to global intensive farming methods has been damaged and depleted of nutrients – can play an important role in enhancing soil fertility. Enhanced fertility may reduce the reliance of farmers on certain chemical fertilisers, which, in turn, can significantly decrease carbon footprints and costs, as well as minimise the negative impact from agriculture on water quality in local areas.
It is also thought that regenerative practices can increase the water-holding capacity of soil, therefore potentially mitigating the impacts of flooding and drought, both of which may become more prevalent and severe on account of physical changes in our climate. At present, it may be a stretch to say that regenerative agriculture can reduce our impact on climate change; however, it appears that it can deliver reductions in agricultural emissions and improve resiliency to climate risk.
Rebecca White, responsible investment analyst, Newton Investment Management.
Doc ID: 747507