ESG, agriculture and rural landownership - a story that needs telling

Rural Britain is facing seismic change.

Adapting to a post-Brexit world may be the immediate priority for most farms and estates, but another issue is inexorably starting to cast its influence over a growing number of the short and long-term decisions that need to be made.

Both the marketplace and public policy are increasingly being driven by three letters - ESG. Innocuous on their own, but rather more complex when spelt out – environment, social, governance. A trio of concepts so wide ranging that farms, estates, and indeed all decision makers, can understandably feel rather overwhelmed when trying to work out what the ramifications are for their own businesses.

Although easy to dismiss as another fashionable topic, a closer look at ESG shows it is from being a short-lived trend. It is more a way of life and guiding purpose for people and business irrespective of the type of industry. In the rural world, those in charge may well be pleased to find that they are further ahead than they might think.

The E, the S and the G are often described as non-financial factors or a set of standards. But to understand ESG properly, we believe that it is much more akin to a moral code. This recent launch by the Prince of Wales of his Terra Carta, or Earth Charter, embodies that moral imperative and offers leadership to industries well beyond the rural sphere.

The E

The Environment is often the reason why so many farms and estates exist in the first place. Whether it was last year or 300 years ago, the reason for a family owning an estate is to enjoy the environment that it provides, along with the space and opportunity for biological growth, the tranquillity, the flora and fauna.

Farmers have a vocation to work and run businesses in that same environment, and it provides them with the antidote to the commercial pressures they face. Protecting and enhancing that environment, whether the individual farm or estate, wider parish or county, is woven into generations of land-owning and farming families.

The S

The Social element is the society or community within which landed businesses live and operate, and who in turn have a mutual dependency on each other. The health, welfare, education, skill, passion and longevity of those that live and work within the countryside is vital to ensure the environment is maintained.

Keeping traditional skills and innate knowledge alive while adapting to run a farm using increasingly autonomous machinery may seem incongruous, but such diversity of interest supports the rich social community fabric which people enjoy over the generations. Changing times means changing roles, retraining and adjusting mind-sets, but will also mean communities surviving intact as they adapt into the future.

The G

Governance controls the behaviour of people and the businesses they operate. It is their business plan, but also their philosophy or ‘moral compass’ that espouses the principles by which they live their lives and the direction of their businesses.

By the nature of landed assets, much of what is owned is visible to the public or employees so it is difficult not to be open and transparent.
The public along with the numerous statutory bodies, organisations and stakeholder groups that farms and estates need to function, all work best with businesses that they understand and trust.

Building up and maintaining that social capital has real benefits when trying to deliver diversification projects such as sustainable housing. The public is often the customer, a principle that recipients of public money need to better understand with the repatriation of farm policy away from the EU.

Existing stewards

Hopefully the relevance of ESG is becoming clearer, but so to the fact that much of it is already engrained in existing landed businesses. Many landowners recognise that they are stewards and custodians of the land that they currently control and irrespective of whether they are passing it to the next generation or one day to a new owner, they can still make a difference.

Research into the Gen Z generation shows that they are much more concerned about environmental and social issues. While they are the custodians of the future, they are also the buyers of the future and will value sustainably managed land and its produce more that we do now.

Sustainability of farms and estates is also embedded in financial security. There is a suite of current and proposed schemes, based around the delivery of public goods, to provide funding to help soften the post-EU reduction of direct support for farming businesses.

Governments understand that allowing business to survive in difficult times means less cost for them in the future. Embracing ESG will allow rural businesses to diversify, evolve and continue to be relevant to their employees, investors and customers.

It is about continuing to make profit, but also ensuring that the business does not move backwards. Some businesses already understand the value of ESG and have capitalised on this, while for others it is an opportunity still to be realised.

Storytelling

To us, this is a hugely exciting time. The custodians of the countryside are in the limelight and can, if they want to, show that they have been quietly getting on with ESG for decades.

It is a story that needs telling. How businesses tells their story is equally as important as being part of it. Some are natural communicators, others less so, but the ability to read and react to public perception and demand is crucial to gaining public trust and future support.

Many farms and estates now have a public profile and with that profile comes responsibility. Business take years to gain a reputation and can lose it overnight if the public does not like what it sees.

It might also feel a humbling time. The previous generations before us have done amazing things, they invented machinery, brought electricity to our houses, fed the country when it was starving (several times) and made sure that we can phone friends and family on the other side of the planet from the middle of a field.

Sadly, much of it came with unintended consequences and so we still live with degraded soils, pollution, declining habitats, global warming, social inequality and diversity issues today. Not forgetting on the social side, the issues of an ageing farming community.

We have been set a quite list of challenges, although we should feel a huge sense of pride that on our watch we have grasped the nettle and started on the long road to making a difference.

In the same way that from having planted a tree or a wood, it is easy to wonder what is the point of the hard work. However, after a few years and always sooner than expected, the results start to show themselves and you find that that the journey from concept to planning and realisation is already rewarding.

Do you agree with Alastair? He’d love to hear your views and opinions on this subject. Do drop him a line to continue the debate

Photo by Norman Xu on Unsplash