Subsidies for agriculture must be aligned with climate and nature objectives. This call is made by the Fairr network of investors in the run-up to the G20 summit that will be held in New Delhi on 9 and 10 September. The focus in government support for agriculture must move away from overproduction and towards climate and nature protection.
“Subsidies create perverse incentives that emphasize quantity at the expense of climate and nature,” Fairr said in the statement. The investor alliance is calling on the finance ministers of the G20 countries to stick to their previous commitment to reform agricultural subsidies. According to Fairr, such a reform is necessary to achieve complete zero CO2 emissions by 2050 and to achieve climate and nature objectives.
Big numbers
Investors wouldn't be investors if they didn't put numbers to it. In the statement, Fairr writes that figures from the United States (UN) show that governments worldwide spend almost $500 billion per year on support for agriculture, which has a price distorting effect and is detrimental to the environment and society. The loss of biodiversity is already having an impact on economic activities. An estimated $44 trillion in economic value creation depends on ecosystem services. That's more than half of global GDP, according to Fairr. This impact on GDP has an impact on the financial system and therefore on all diversified portfolios.
Agricultural subsidies must be used differently, according to Fairr. The collective proposes, among other things, to provide measurable and actionable financial support to countries and farmers that is proportionate to the public goods or social services provided. For the farmer, the incentives must shift from only high yields of certain products at the expense of the environment and climate to a better balance in which sustainable agricultural practices are also rewarded. Subsidies must be completely phased out for products with high greenhouse gas emissions. Funds and financing opportunities should be made available to stakeholders affected by the reforms.
Not the least
Fairr may not be a very well-known name, but not the least investment funds are members of the collective. For example, the investment branches of Dutch companies such as ABN Amro, ASR, Aegon, Robeco and Achmea are members of Fairr. Well-known foreign names such as BlackRock, Rockefeller Capital Management, MacKenzie Investments and ADM Capital are also members of the collective. In total, all members together represent $70 trillion in assets. Not all members signed the statement that Fairr released.