Top ten takeaways from The Rural Report 2021

Taking a theme as wide-ranging as environment, social and governance (ESG) for a magazine is ambitious – there is simply so much to say. To that end, we haven’t attempted to provide all the answers, as this is certainly not a “how-to” guide. What we have tried to do is curate a selection of thought-provoking articles that share both insights from our own rural teams and the views of thought leaders from the wider food and farming sector. I hope you find them as inspiring and interesting as I have. I’ve pulled together my top ten takeaways and conclusions. I’d love to know if you agree.

Diversity matters

Some might dismiss the ongoing diversity debate as woke-ism, but as our big interviewee, the successful food and farming entrepreneur Wilfred Emmanuel-Jones points out, it doesn’t make economic sense to ignore a rapidly growing market for goods and services that, in some instances, is right on the doorstep of diversified rural estates. Almost 60% of those who responded to our Rural Sentiment Survey said more should be done to improve workplace diversity. The opinions expressed in My View are ones for which I have the highest respect.

Now is the time for action

As Andrew Shirley points out in his overview of the issues facing the food and farming sector, the consequences and challenges of climate change, the Covid-19 pandemic and Brexit mean rural businesses have to adapt. We have seen a timely spike in commodity prices, but that shouldn’t be used as an excuse to delay planning for the future. Even once Brexit is forgotten, the challenge of climate change will continue to drive policy. A business plan would be a good start.

A positive outlook

It was heartening to read the results of our Rural Sentiment Survey. Almost 90% of respondents say they are optimistic about the future of their rural businesses. Many are already committing to new projects to make them greener and more sustainable – 58% say they are planning to plant more trees. The government could still do more to help. It really needs to get a grip on two of the scourges regularly highlighted by rural dwellers: fly tipping and poor broadband.

Constructive debate is key

Species reintroduction is a controversial topic and unfortunately, as with many issues these days, this is a debate that has become increasingly polarised. Hopefully our article on the subject, featuring the views of conservationists and farmers, presents a balanced view. It’s important to be led by science and consider the economics of improved biodiversity in an environment where traditional land uses may need to be challenged in the light of environmentally led public policy.

ESG heralds a new era for the land market

The shift from area-based farm payments post-Brexit to environmental support has led some commentators to predict a slump in agricultural land values. An alternative view is that the focus on the environment will actually help support prices. Our Farms & Estates team is certainly dealing with an unprecedented number of enquiries from a new breed of prospective landowner enthusiastic about rewilding or regenerative agriculture. Funds are also increasingly keen on land-based ESG investments.

Decarbonisation requires land

Investors and funds are often derided for being solely focused on short-term profit. But, as our client case study looking at the work of Africa’s largest agricultural investment fund shows, doing good and offering strong returns are not mutually exclusive. This kind of ESG investment is set to become increasingly important for farmers and landowners in the UK as the role of their land in decarbonising the economy grows.

Professional bodies must lead the way

A professional land valuation is an involved piece of work that follows strict criteria laid down by professional bodies such as the Royal Institution of Chartered Surveyors. But what happens when those criteria no longer fully reflect emerging land uses like rewilding and the provision of natural capital? Before making long-term strategic decisions, landowners need the comfort of knowing what the value and taxation implications will be. Valuation standards and the tax code need to keep up.

Strategic planning is key for trustees 

Thinking about the future has never been more important – not just for those running rural estates, but also their trustees. As Alastair Paul points out in our strategy discussion, not commissioning a strategic review at a time of radical change could be seen as an oversight by trustees. Subsidy payments are disappearing, ESG is rising up the business agenda, lack of diversity stands out, and more open succession discussions are happening. Understand the risks and opportunities in your governance.

ESG is about community stewardship

The E in ESG attracts a lot of attention, but landowners with a long-term view also have potential to deliver on the other elements by following a stewardship model when it comes to development on their land. The Southwick Estate’s plans to build a new garden village exemplifies this. The development will benefit the environment, create new communities and build a legacy for the estate itself. Patient capital has always delivered ESG.

Knowing what you own is crucial

Estate income streams are likely to be very different in the future as natural capital starts to become a valuable asset class and income generator in its own right. But you can’t properly value or sell something that you don’t know you own or haven’t quantified. Our client case study focusing on the Pilkington Estate shows how important it is to look at all the options to decide which ones are worth pursuing.