Growing desire of farmers to speak with one voice on environmental issues, coordinate more effectively and share sustainability insights and innovations.Increasing pressure from supermarkets and others in the supply chain to develop greener products, backed up with increased due diligence.Growing regulation of farming techniques and inputs, such as chemical fertilizers.Increasing engagement between governments and industry bodies, as farmers and politicians identify strategies to increase food security while safeguarding the environment.The sector is experiencing several key trends as it seeks to address climate change and other environmental risks, including: Limited control over input prices (due to global factors) and output prices (due to power of wholesalers and supermarkets).Geopolitical disruption ranging from Brexit to the COVID-19 pandemic and the war in Ukraine.High degree of government involvement through policy initiatives, subsidies and tariffs.Fragmented, relatively small-scale activities with wide variations in land use – arable, fruit, livestock, biofuels, renewable energy, etc.Some of the agriculture industry’s most notable features are: This, together with reliance on local geography and resources, means that transition initiatives are varied, complex and unique – as are its financing requirements. However, agriculture is a highly varied and fragmented industry, with an exceptional degree of owner-management often extending to several generations. The immutable relationship between agriculture and nature makes this industry keenly aware of the need to transition. Over halfway to COP27, we’re exploring transition pathways for three more crucial economic sectors: agriculture, consumer goods and technology. In the run-up to COP26 the EY team published a paper examining potential transition pathways for three key economic sectors – shipping, renewables and electric vehicles – together with some of the associated factors that will enable financial institutions to fulfil their needs. With this understanding, financial firms will be equipped to support companies and projects in a way that solves their most pressing decarbonization needs. Understanding these transition pathways helps to identify customers’ current and future transition activities, and the associated financing requirements and risks to be managed. It’s clear that no one organization or industry can solve the problem alone: climate change is everybody’s business, and financial institutions will need to work closely with a range of industries to accelerate action.Ī detailed understanding of sector-specific transition pathways will be critical to the financial industry’s ability to turn climate ambition into climate action that protects and creates value for society, the planet and business. That will require $32t of investment across a range of sectors and geographies by 2030 – above and beyond the cost of ''business as usual'' funding for transitioning businesses. The COP26 summit of November 2021 saw over 450 financial institutions commit to aligning more than $130t of capital with Paris Agreement targets by 2050.
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