Too responsible?

While engagement with the process is encouraging, the private agri investment market is having to navigate a patchwork of responsible investment guidelines already established and still taking shape.

On October 15, the United Nations is set to endorse The Principles for Responsible Investment in Agriculture and Food Systems, new guidelines initiated by the FAO’s Committee on World Food Security (CFS).

The discussions and negotiations surrounding the process involved pension funds and the private sector, as discussed in last week’s Q&A with Robynne Anderson, secretariat for the International Agri-Food Network.

It is clearly a good sign that these parties are engaged with the process and that time has been dedicated to this important area. But the sector must also be wary of getting too granular, too quickly.

One possible issue is that we end up with a raft of different guidelines, all of which mandate slightly different things – the UNPRI already has Farmland Principles, for instance, which have been signed by several private investment firms and institutional investors.

Too many guidelines could be off-putting for new entrants to the agri investment market; however keen they are to invest responsibly, there’s a danger of reporting/guideline overload.

Equally, it’s always going to be hard to please all people, all of the time. For instance, some investors are complaining that the CFS-led principles are too focused on developing markets.

As Paul McMahon, managing director of SLM Partners, the regenerative agriculture-focused fund manager, puts it: “There are plenty of problems with agriculture and food systems in developed countries too – uncertain profitability, an aging farmer population, and the erosion of the natural resources on which our future depends,” he wrote in a guest commentary for us this week. “Responsible investment can, and should, play a role in addressing these problems too.”

Other sources suggested that the CFS-led initiative might also focus too heavily on the public sector.

APG, the Dutch pension manager, finds the UNPRI Farmland Principles most useful at this stage, not surprising considering UNPRI’s institutional investor focus – they were established in 2011 by institutions such as ABP, TIAA-CREF, PGGM and APG itself.

But the Dutch investor does employ them alongside other guidance in the sector and will take an active interest in the outcome of the CFS-led initiative.

“We think the PRI Farmland Principles are most suitable for institutional investors at this stage, but will continue to closely monitor the development of these principles,” said Marta Jankovic, APG’s senior sustainability specialist and head of ESG integration for alternatives.

APG is encouraged by the attention responsible investment is getting from various stakeholders worldwide, and so are we, but the industry should be wary of creating a maze of guidelines for first time investors to navigate.

What is your view? Do you think the industry needs additional guidelines? Do get in touch at Louisa.b@peimedia.com or use our snazzy form to submit a story idea.