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Regenerative Agriculture Vital to Cultivating Climate Resilience 

Investor network FAIRR releases a first-of-its-kind report on the agri-food sector’s commitment to regenerative agriculture practices.   

There is a strong investment case for regenerative agriculture to build resilience to climate change, especially floods and droughts, through its cultivation of healthier soil, Alessia Lenders, Head of Impact at asset manager SLM Partners, told ESG Investor.  

SLM Partners is among several investors who have backed a new report from investor network FAIRR analysing commitments on regenerative agriculture by 79 global food and retail giants, worth over US$3 trillion and representing almost a third of the sector.  

The report found that 63% of the global agri-food firms publicly referred to the potential of regenerative agriculture as a solution to the climate and biodiversity crises. But of this group, 64%, including Chipotle, Domino’s and Bunge, had not put in place any formal quantitative company-wide targets to achieve those ambitions.  

The research also found that there was no internationally agreed definition of ‘regenerative agriculture’ which made claims about it hard to substantiate, creating significant risk in terms of incoming regulation and changing reporting frameworks.  

The incoming EU Green Claims Directive, due to come into force in 2026, will put an 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 this year) stipulates that any environmental claims must be fully verifiable and substantiated.   

Natural defences 

Speaking to ESG Investor, Lenders from SLM Partners, which invests in regenerative agriculture businesses, said that while there was no precise definition for regenerative agriculture, there was a set of principles around soil health which were “a starting point”.   

She said there was a strong investment case for regenerative agriculture in that it reduced costs by reducing inputs such as fertilisers and organic food could be sold at a premium. She said a major investment case was also climate resilience.  

“This is all tied to soil health, because regenerative agriculture is about using less chemicals and understanding the biology of the soil and your farm as a living ecosystem,” she explained.  

“Healthier soil will be able capture water and retain more water, so when it floods you can capture that water and keep it on the land for periods when it gets drier.  

“It’s important to build soils that can help you deal with the climate extremes that we’re going to get more and more.” 

She added that in protecting and building up the natural capital of land, instead of just extracting and depleting it, you avoid “having an asset that is worth less when you’re done with it than before”.  

This month has seen a dramatic increase in flooding events with extreme weather hitting ten countries and territories in just 12 days – the most catastrophic being the floods in Libya, which the UN estimates has killed more than 11,000 people.  

Research by FAIRR also found that only 8% of companies it analysed that publicly report on regenerative agriculture as an opportunity have financial commitments in place to support farmers in their supply chains to incentivise uptake of regenerative agriculture.  

Lenders said that it was concerning how few companies were financially supporting farmers.  

That’s a big shortfall because you can’t expect farmers, who are already in a situation where they have low margins compared to the other players along their value chains, to take this risk of changing the way they’ve been doing things for generations without having the financial support to do so,” she added.   

Lenders said SLM Partners structured all their investments to make sure farmers aren’t financially disadvantaged through leasing them land at cheaper rates as they transition.  

The post Regenerative Agriculture Vital to Cultivating Climate Resilience  appeared first on ESG Investor.

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