The social factors focus on the wellbeing of agricultural workers, local communities, and consumers. Governance factors focus on management structures and practices to ensure accountability, transparency, and ethical behaviour The prominence of concerns regarding climate change as well as human rights and health, are driving forces behind consumer and investor demand for ESG reporting.  ESG considerations are likely to become increasingly vital for agribusinesses in South Africa. Meeting specific ESG criteria may become the difference between being included or excluded by lenders, retailers, consumers, investors, and local and export markets.S&P Global recently produced the ESG materiality map for agribusiness, which clearly illustrates that both from a credit and stakeholder perspective, the critical issues at this point in time are climate risk and biodiversity.

Grain industry considerations

It seems as though grain producers in Australia are being encouraged to recognise the importance of ESG compliance and to consider the opportunities  that ESG may create. Melissa McKenzie from Smith Shearer, an Australian business consultancy focussing on the farming industry, wrote in a recent blog: “ESG is becoming an unavoidable part of doing business, much like the adoption of electronic livestock identification. While concerns about cost and time are valid, ESG compliance can ultimately balance out, with improved farm management, enhanced market access, and significant competitive advantages. For grain farmers, this shift isn’t just a box to tick but an opportunity to grow and secure your business for the future.”

Some of the things that grain producers can do from an environmental perspective are optimising soil health, conserving water, adopting sustainable farming practices, and reducing emissions. Discussions are currently underway between industry stakeholders, the National Department of Agriculture and the Department of Forestry, Fisheries and the Environment regarding sectoral emissions targets for agriculture.

By Annelize Crosby, head of legal intelligence, Agbiz