Agribusiness Faces Growing Pressure from Shareholders to Comply With ESG

The UN Food Systems Summit said in its website that current food production practices were harming the environment, after last month’s meeting in Washington DC. The summit was organized by UN Secretary General Antonio Guterres to respond to growing demand for commodities and its impact on the environment.

However, lobby groups that represent local farming and fishing communities had decided to boycott the event, saying it would further benefit the corporate interests. In response, the UN said no agribusiness was part of the meeting and it was developed by the three food agencies of the UN.

Groups that represent local farmers claim policies of big agriculture corporations cause loss, poverty and poor health for local farming communities.

On the other hand, these giant agribusiness companies might be forced to change their way of making business in the face of incrasingly stringent regualations and shareholder pressure.

The big agriculture companies, which only reacted to public scandals until recently, started to face another pressure. The ones that put pressure on these companies have increasingly been their shareholders. Together with some investors, these shareholders demand that companies show their willingness to comply with environmental, social and governance (ESG) standards.

The compliance could be through commitments and actions, the products they offer or financing instruments they use. As more and more investors give attention to ESG, they channel their investments more into sustainable businesses.

Agricultural companies has come to realize that if they do not comply with ESG standards, the investment pool available to them will keep getting smaller.

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