Jakob Thomä on… why we need to talk about agriculture

Investors need to ask what a serious agriculture transition strategy could entail, says RI's guest columnist.

Jakob Thomä

In the seminal cinema classic Sweet Home Alabama, Felony Melanie (Reese Witherspoon) is greeted by her mother Pearl in Alabama (after getting bailed out of jail by her dad… I know, how good is that movie!) to the words: “Good land of the living, you are skin and bones… Do you want me to reheat you some chicken-fried steak?”

And this, dear RI readers, is why we have a problem. Food – and especially meat – is not just energy. It is culture, it is religion, it is the manifestation of the “nurturing mother in Alabama” archetype.

Fossil fuels may have powered our machines and engines over the past century, but food? Food powers us.

Which is why we need to talk about agriculture.

NGOs like Carbon Tracker Initiative have made sure that no sustainable finance professional working on climate can avoid the fossil fuel debate. And there is an obvious reason for that. They are responsible for most emissions (even if that doesn’t make upstream fossil fuel production the most effective focus for climate action, somewhat counter-intuitively).

But if Chapter 1 of the transition to net zero was (and is) energy, Chapter 2 will be agriculture. According to estimates by the Inevitable Policy Response, one in five tonnes of GHG emissions in 2050 will be linked to the beef, lamb and dairy industry.

Without land, we can kiss net zero goodbye.

Even in a ~2C world, we’ll probably need about 3 gigatonnes of negative emissions from land by 2050.

Of course, the issue goes beyond climate. The social dislocation and risks of conflict from the competing demands on land – a risk for food security and the transition – won’t just matter for climate action.

Social risks from land and food crises may double the baseline climate risk as identified by the Network for Greening the Financial System (NGFS) scenarios. Climate change won’t (and this will surprise no one) help.

Just like you can’t take the honky tonk out of Felony Melanie, you can’t take agriculture out of the climate story.

Investor (in)action

Unfortunately, it does not seem like that realisation has fully set in across the investment community.

Retail investors looking for vegetarian and vegan funds on the European retail investor platform MyFairMoney are greeted with a “no results” error.

In the roughly 2,800 climate shareholder resolutions tracked by Ceres, only 50 are even spuriously related to agricultural emissions (that’s 2 percent for those counting at home!).

Meanwhile, a fund stating it is focusing on food’s impact on biodiversity has in decreasing order exposure to Walmart, Starbucks, Target (??), Unilever, Chipotle and McDonald’s. Who had the largest beef hamburger seller in the world on their bingo card? Not me…

If you thought the fossil fuel lobby was a tough nut to crack, welcome to the final boss: Agriculture Inc. Whether Germany, the Netherlands, the EU, the US, as Kaya Partners research shows, there isn’t a major agricultural market where policy has made a meaningful dent.

People worry about carbon capture being an untested technology. Alternative proteins will likely need to meet more than half of protein demand growth by 2050. Alternatively, we will need a lot more chicken steak from Pearl Smooter.

OK, Mr Grinch! Where is the good news? Sadly, there isn’t much. But there are some small buds of hope.

For one, we haven’t even begun to deploy the kind of energy that financial institutions exerted on the fossil fuel industry to agriculture. There is a lot of bioethanol left in the tank in terms of moving on agriculture. Of course, that requires financial institutions mobilising the appropriate pressure.

And while increasing pressure on land use and availability will challenge deforestation targets, deforestation free supply chain policies, just like Carbon Border Adjustment Mechanisms, are creating – more so than arguably ever before – meaningful and measurable positive policy leakage. Ending net deforestation is within reach over the next 10 years, a meaningful milestone.

And while major markets have struggled to accelerate agricultural policy, Denmark is set to become the first European country with a carbon tax on agriculture – largely with the support of the agricultural industry. Perhaps a sign that the tide is turning.

Land use limits will also mean that we will stop treating land for beef and cattle as an effectively unlimited resource. It will simply not be possible to have the kind of beef demand growth some people project, and still feed the world.

And finally, culture can change. Fossil fuels supplied more than 90 percent of our global energy. Beef and lamb and dairy represent less than 10 percent of our food calorific intake.


The challenge of decarbonising an entire energy system versus 10 percent of our calorific intake at least in theory should be easier to address. And unlike with fossil fuels, we don’t need to get to net-zero beef or lamb consumption to limit global warming to well below 2C (indeed, land management will continue to require livestock in at least some parts of the world).

Whatever the next steps, making progress requires centring the issue to begin with. Which may be the biggest challenge. Who reading this has the bandwidth to do more?

What’s more, many of us have by choice, habit, or force become semi-experts in the energy industry. How can one expect us to now become agriculture experts too?

But expertise is sorely needed. It may be easy to dunk on McDonald’s in a biodiversity fund, but of course there are serious questions what an agriculture transition strategy looks like. There is no doubt that an asset manager could make the case for McDonald’s, even if I don’t find it plausible.

Perhaps no scene in Sweet Home Alabama is as memorable as when Pearl tells Melanie: “You can’t ride two horses with one a**, sugarbean.”

Well, sugarbean, if we want to get to net zero, we’re gonna have to…

Jakob Thomä is co-founder of Theia Finance Labs (formerly Two Degrees Investing Initiative), research director at Inevitable Policy Response and professor in practice at University of London SOAS.