Sustainable Agriculture

From Open Risk Manual


Sustainable Agriculture is the management of plans and animals to produce food, feed, fibre fuel and other products in long-term sustainable manner

The agriculture sector, it plays a central role in climate change, sustainable development and food security. It is projected that by 2050 the global population will increase to 10 billion, resulting in a 50% increase in the demand for food. However, even at present, the food supply chain contributes 19-29% of global greenhouse gas (GHG) emissions, the majority of which, for most supply chains, occurs at the farm level (80-90%). This alone presents opportunities for significant climate change mitigation. However, agriculture differs from other sectors when considering climate change mitigation as it can act as both a source and a sink for GHG emissions. Soil carbon and Biomass (trees, shrubs and grasslands) are also relevant as major pools of carbon. For this reason, agriculture has the potential to be a net positive sector from an emissions perspective. At the same time, agricultural productivity is simultaneously vulnerable to climate change (including, but not limited to, heat stress, drought, flooding, changes in seasonality and extreme weather events) and central to supporting adaptation and resilience through its provision of ecosystem services and income for billions of households worldwide.

Subjects Covered

The following economic activities are explicitly addressed in the EU Sustainable Finance Taxonomy:

  • Growing of non-perennials: including cereals, rice, leguminous crops and oil seeds, vegetables, melons, roots and tubers, sugar cane and fibre crops;
  • Growing of perennials: including grapes, tropical and sub-tropical fruits, citrus fruits, stone fruits, other tree and bush fruits and nuts, oleaginous fruits, beverage crops, spices, aromatics and drug and pharmaceutical crops;
  • Animal production: including dairy and other cattle and buffaloes, sheep, goats, pigs and poultry and the management of their waste (manure) and related grassland or pasture. In addition, mixed farming, where combinations of the above activities are carried out on a farm, can be addressed via the application of the relevant thresholds and criteria from these same three activities.

Criteria and Thresholds

As noted above, agriculture can act as both a source and a sink for GHG emissions. However, it may not be possible to reach net positive emissions in every instance of agricultural activity or on every farm, particularly those that specialise in nature and/or have low carbon stocking capacity. Therefore, the Taxonomy does not require the demonstration of net positive emissions at the activity or farm level, but instead requires that the following three criteria must all be met for agricultural activities to be recognised as delivering substantial contributions to mitigation:

  1. Reduced emissions from ongoing land and animal management.
  2. Increased removals of carbon from the atmosphere and storage in above- and below-ground biomass through ongoing land and animal management, up to the limit of saturation levels.
  3. The agricultural activity is not being carried out on land that was previously deemed to be ‘of high carbon stock’.

The lack of deep GHG reporting datasets from which to establish best performance benchmarks, coupled with the lack of emissions budgets or sequestration targets for the agricultural sector at either the EU or global level, meant it was not possible to set robust absolute GHG thresholds for either criteria 1 or 2. Furthermore, given the high degree of heterogeneity across the agricultural sector (in terms of production system, crop or livestock type, farm size, environmental and biophysical conditions, etc.), it was felt to be inappropriate to do so.

However, requiring a relative GHG improvement compared to an ‘own-farm counterfactual’ is workable within this context of high heterogeneity. For criteria 1, emissions reductions targets as a percentage of that counterfactual have been established using studies of the emissions reductions needed across the agricultural sector as whole over time. For criteria 2, recognising that carbon stocking potential is highly variable across different land parcels, but that carbon sequestration represents a large mitigation potential available to the agriculture sector, a simpler requirement has been set – simply that carbon stocks are increased over a 20-year period – which recognises that preventing ongoing carbon losses and increasing sequestration is viable to make a substantial contribution in this case. It is noted, however, that the studies on emissions reduction paths are limited in number and therefore the criteria would benefit from greater clarity on the precise transition needed in the agriculture sector to contribute to a net-zero economy in 2050.

In addition, recognising that relative GHG improvement targets are a fairly blunt instrument and require farm level GHG accounting, which is not yet widespread, an additional, alternative approach is proposed. Namely, demonstration of the deployment of a specified bundle of land and, if appropriate, animal management practices across the production area. From a review of the scientific literature, these practices have been selected because they deliver substantial mitigation with relatively high certainty across a range of biophysical and farming conditions. They should therefore be widely applicable and provide a more directly communicable approach to farmers, although this would benefit from testing with key stakeholders globally, including small- and large-scale farmers. The Platform on Sustainable Finance should regularly review this list of practices to integrate new advances in scientific knowledge. It would also be advantageous to work with existing standards and certification schemes to determine whether or how such schemes could be used as proxy indicators for compliance with these bundles of practices.

To maximise usability, it is left open to the user whether they demonstrate i) emissions reductions and increased sequestration or, alternatively, ii) the deployment of the specified bundle of practices. However, whichever approach is taken, three yearly audits are required to demonstrate ongoing compliance with the criteria and thresholds. This is to address the multi-year timeframes over which emissions reductions and carbon stocking can occur and acknowledges the risks to the permanence of carbon stocks.

It is noted that agriculture has the potential to supply materials to a variety of sectors, but these will primarily be addressed in the Taxonomy through the energy and manufacturing sectors (e.g. crops for bioenergy or crops for food respectively). No different treatment is proposed in the agricultural criteria depending on the ultimate use of the crops produced. This is for the pragmatic reason that many agricultural producers do not know in which supply chains their products will end up.