Overwhelming data shows that agricultural companies that perform well also address environmental, social, and governance (ESG) criteria and other associated metrics progress their performance.
That's according to Richard Heath, the chief executive of Australian Farm Institute, a leading independent agricultural policy research organisation.
ESG criteria is a socially conscious investor term that sets a standard for a company's behaviour to screen potential investments.
Mr Heath presented the data at the Riverine Plains Innovation Expo, held in Yarrawonga on Friday and said the COVID pandemic had shifted focus on these metrics.
"There is lots of data accumulating, [and] there's lots of companies that now report on ESG, that can have their performance base that can be put into baskets of companies on stock market indexes, and then compared against everyone else," Mr Heath said.
He said issues that affected companies during COVID, like supply chain interruptions and workforce issues, have proven to improve performance.
"If you're a company that understands [these things] and actually measure and invest in things like people, governance, the way your supply chain works in a much more holistic and sustainable way, then it's not probably not surprising that you've done better through the COVID period than other companies."
Mr Heath said such attitudes in companies translate significantly in agriculture and are a fundamental shift "that are really worth paying attention to".
He also pointed to a recent ESG rating report from Nutrein for 2022 to highlight the importance of such criteria to large agricultural entities.
"[Nutrien's report] shows really good clear language about how ESG investing pressures, translate through business like Nutrien to the farm level," he said.
"Just through the sheer fact that they've got eight ESG rating companies that they've employed to write their ESG performance in their annual report ... but it is so important for them to demonstrate how good they are in delivering on ESG metrics to retain shareholder interest."
Nutrien's report highlighted many company actions, including a record total recordable injury frequency performance in alignment with their role in farm safety and more substantial grower interest in Nutrien's Carbon Program.
Environmental criteria consider how a company safeguards the environment, including corporate policies addressing climate change.
Social criteria examine how it manages relationships with employees, suppliers, customers, and the communities where it operates, while governance deals with leadership, executive pay, audits, and other related shareholder rights.
He also suggested corporate agricultural industry reporting frameworks are way ahead of any current policy framework.
"With the change of government, who knows, they might get more aggressive with it," he said.
"But corporate pressures, investing pressures, access to finance and market access, I believe all these are going to be orders of magnitude that are more significant in terms of what are the direct implications for farm businesses on sustainability practice," he said.
"The corporte world is so far ahead of policy at the moment, and as long as we have these evidence systems in place, as long as we can report on that, then that will put us in good stead even if there is policy changing."
Several industry sustainability reporting frameworks are either in development or well established, including frameworks for the sheep, grains and beef industries.
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