ESG Standards: What are they and how do they impact AgTech?

May 11, 2022
written BY

Silvia Rojas

After 2 years of a global pandemic and amidst a major geopolitical conflict and extreme weather events, the world is quickly reconfiguring the way it does business. Companies, governments, and value chains have felt the pressure of a new attitude towards environmental, social, and governance (ESG) issues, as well as the fear of a systemic collapse, such as the one driven by Covid-19, that could threaten their operations overnight.

Although there are still no hard and fast rules about how to measure ESG standards, corporations are feeling compelled to gather and share metrics about their practices in order to protect their relevance and reputation in the market. While many companies will have to work on readjusting their business models, AgTech enterprises will function as heralds of sustainability and promoters of ESG due to their natural affinity with data & digital-first approaches that enable far easier communication and reporting of metrics up the ownership chain.

As an example, according to S&P Global Market Intelligence, the negative impact of corn production on the environment exceeds 170% of the value in USD of the output of corn itself. However, any solution to this problem will most likely not be straightforward. Addressing it will likely require combined efforts from various agricultural agents in search of alternative practices with efficient use of land, water, biodiversity and technology to grow crops and reduce environmental impacts such as pesticide pollution, soil erosion and greenhouse gas emissions. At Agtuary we work with data that provides high-quality and detailed insight about agricultural properties over time which can be used as a guide for investment and managerial decisions and has the potential to help address broader environmental issues.

Social (S) changes will probably address more directly agricultural practices, ensuring fair trade and promoting a diverse and equal workforce, amongst others. Nonetheless, transparency will be pivotal for both agriculture and Agtech because gathering and presenting data will provide a sense of accountability in the sector. Within Governance, Agtech has an important role to play in ensuring that information is traceable from its origin and reliable when presented to owners and stakeholders in the agricultural land or surrounding environment for due diligence or regulatory purposes. We are already seeing the beginning of this with many emerging platforms to aid in Measuring, Reporting and Verification (MRV) of agricultural and natural assets.

ESG is already driving a great portion of investments into agriculture, forestry and natural assets and is expected to increase in the future with more businesses facing market pressure to disclose their environmental impact. There is a great opportunity for Agtech companies not only to accurately record value and communicate data but to lead the way in the future of best agricultural practices.

Agtuary is indexing farmland and making rural properties searchable for growers and investors with multi-decade production and climatic data which help to make critical purchasing, investment & financing decisions. Among the latest improvements to our platform, we highlight the Temperature Profiles and Bioquality & Biomass features. These variables enrich the overview of any agricultural property, providing a complete picture of the results of the adopted agricultural systems, practices and climatic conditions over time. Our goals include providing this information in order to connect agents within the sector and give them a sound understanding of the present to plan and manage the future.

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