Agriculture at COP26: The Time To Act Is Now
This past year we've seen everything from unprecedented destructive flooding in Germany to another summer of record-breaking wildfires in the American West. These jarring scenes are just the latest in our understanding of the climate emergency’s massive impact on both our planet and our society.
As the much-anticipated UN COP26 Climate Summit progresses this week in Glasgow, Scotland, the urgent tone of the proceedings thus far has reflected the seriousness of the crisis; the summit is a culmination of a year’s worth of dire climate warning signs.
As with past COP summits, agriculture will be centrally important to the discussion among our world leaders over the next couple of weeks. Owing to our current global warming and population growth trajectories, research suggests that up to an additional 189 million people could be facing hunger by 2050 with a 2°C increase in mean global temperatures. Agriculture, meanwhile, both represents a significant portion of the problem as well as a huge area of opportunity for solutions.
Historically, the agriculture industry has contributed about one-third of global greenhouse gas emissions while also being a driver of deforestation and other adverse land use change. However, as the demand for food grows, and as all of those involved in agriculture bear witness to its vulnerability to climate hazards, the world is looking to farming as a way to build resilience - and to even reverse the effects of climate change in the long run.
Farmland will again be at center stage during the COP26 events, and if this year’s events are any indication, the world’s interest in agriculture-driven climate solutions will only gather momentum from here. Investors have an unprecedented opportunity to participate in these solutions by deploying capital into farmland, and therefore, a reason to watch the events of COP26 closely.
Let’s take a moment to review what our world leaders will debate over the next two weeks, examine the history of the COP summits, and peer into the future of what this year’s summit may signal for farming’s role in restoring our planet.
What Are The UN’s “COP” Summits?
This year’s events in Glasgow, Scotland are the 26th annual proceedings of the UN’s seminal climate summit. “COP” stands for “Conference of the Parties”, which represents the leading decision-making body of the United Nations Framework Convention on Climate Change. The COP summits have been held annually since 1997, with the first one having taken place in Kyoto, Japan, resulting in the ratification of the Kyoto Protocol - a keystone international agreement that laid the foundation of the UNFCCC’s subsequent climate proceedings.
In the UN’s own words, these 26 years of proceedings have seen climate change transform from what seemed like a fringe issue to being a critical global priority. This year, the leaders of each participating country are approaching the COP26 summit with a unique urgency, as this year’s conference represents the first formal update to the commitments that these same countries made to the Paris Agreement of COP21.
Given how significant a role agriculture plays in the proposed pathways to meeting the goals of the Paris Agreement, this year’s conference will reveal the global agricultural sector’s progress to date, and will indicate where we’re headed from here.
What did the Paris Agreement Mean for Global Agriculture?
At a high level, the Paris Agreement set forth the headlining goal of limiting global warming to “well below 2°C”, with a more specific target of a maximum of 1.5°C of mean global temperature increases relative to pre-industrial levels. Accomplishing this will require substantial reductions in greenhouse gas emissions from agriculture. This includes carbon dioxide emissions from burning fossil fuels as well as other more potent greenhouse gases industrial farms are known to emit, such as methane and nitrous oxide.
Every country that signed the Paris Agreement was required to submit a plan for how it would accomplish its share of the necessary emissions reductions to meet these targets. COP26 is the first time progress against these plans will be presented in full view among the same delegation of leaders who signed on six years ago. Though the years since Paris have seen mixed results, the urgency around these goals hasn’t gone anywhere - if anything, it has intensified since the Paris Agreement was signed.
Having promptly confirmed the US’ intent to deliver on its promises from Paris upon taking office, the Biden administration is bringing a substantial delegation to Glasgow for COP26 and figures to play a prominent role in discussions of key themes related to climate solutions in agriculture. This will include weighing in heavily on formulating nature-based approaches to climate change mitigation and land regeneration, policy interventions to speed progress, as well as on “unleashing trillions in private finance” to energize climate solutions.
In fact, there has already been a significant acceleration in private financing of new technologies aimed at delivering a “net-zero” economy in the US over the last six years. VC investment in “climate tech” has soared during that time, with a substantial portion of that investment headed for innovative agriculture tech companies looking to shift agriculture from being a contributor to the problem to a leader in solutions. Additionally, there has been a growing wave of commitments to net-zero business from prominent US corporations, including leading CPG companies and large investors making commitments to regenerative agriculture. These trends are some of the COP summits’ most notable outcomes, and illustrate the huge opportunity facing investors to participate in solutions to our climate crisis.
New Inflows of Capital Are Catalyzing Climate Solutions In Agriculture
The last several years of investment in agriculture tech have spurred the development of a host of climate solutions in farming. A growing number of companies are developing programs to verify and sell soil carbon offsets and to fairly compensate farmers who implement practices to restore atmospheric carbon to soils. The buzz around these “regenerative agriculture” practices has grown substantially in the years since the Paris Agreement and will be driving much of the conversation about farming at COP26.
Many of these programs also incentivize farmers to adopt alternatives to petrochemical-based fertilizers, including managing their soils’ fertility through cover cropping or crop rotations as well as through the use of organic soil amendments and natural microbial fertilizers rather than synthetic nitrogen. These technologies not only promise to remove carbon dioxide from the atmosphere, but also figure to substantially reduce the agricultural sector’s emissions of other more potent greenhouse gases such as nitrous oxide.
Meanwhile, farm vehicles and equipment are going electric, and some of the world’s most innovative farmers are experimenting with a new land use style called “agrivoltaics” that combines food production and solar energy production into one system.
All of these innovations coalesce on the question of how we might manage our land for maximum climate change resilience. Therefore, continuing to build new inflows of capital to sustainable agriculture is critical for our climate’s future. In this pursuit, one of the best ways for both individuals and institutions to participate is by deploying capital into farmland assets.
Farmland: Investors’ Big Chance to Participate in Solving Our Climate Crisis
Coinciding with this acceleration in investment in farming-driven climate solutions has been a surge of interest among all types of investors in farmland assets themselves. Historically a very fragmented, hard-to-access asset class, farmland is becoming increasingly available for investment thanks to a variety of factors, including tech-powered fractional ownership platforms. This interest in farmland investing has come both from the masses as well as from some of the biggest names in investing in the US. Bill Gates, the largest single owner of US farmland, said it well himself in his own message to the world leaders participating in the COP26 summit.
At FarmTogether, we truly believe there is no better investment than farmland when it comes to using your dollars to catalyze solutions to our climate emergency. Our vision is to ensure peace and plenty by investing in the sustainable agriculture revolution, and our mission is to bring creative and transformative capital to farming while opening up farmland - a vital, $10 trillion asset class - to all investors.
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Disclaimer: FarmTogether is not a registered broker-dealer, investment adviser or investment manager. FarmTogether does not provide tax, legal or investment advice. This material has been prepared for informational and educational purposes only. You should consult your own tax, legal and investment advisors before engaging in any transaction.