‘Net-Zero’ Policies, ESG Reporting Raise Farm Costs, Food Prices—Report

So-called “net-zero” climate policies are imposing significant costs on American farmers and families, according to a new report from The Buckeye Institute.

A model developed by Buckeye for the report, Net-Zero Climate-Control Policies Will Fail the Farm, indicates that complying with net-zero emissions mandates, and environmental, social, and governance (ESG) reporting standards is likely to increase annual operating expenses for farmers by at least 34 percent. In addition, the model indicated the mandates will result in a 15 percent annual increase in grocery bills for families, as well as significant increases in individual grocery item prices, such as American cheese (79 percent), beef (70 percent), bananas (59 percent), rice (56 percent), and chicken (39 percent).

Net Zero and ESG

“Net-zero” refers to the balance between the amount of carbon dioxide emissions produced and the amount removed from the atmosphere. For a country to achieve “net-zero,” means either not producing any emissions at all or “offsetting” an equivalent amount of emissions through methods like “carbon capture and storage,” reforestation, and the use of “renewable” energy sources. Carbon dioxide pricing schemes like cap-and-trade systems or carbon dioxide taxes are other significant “net-zero” policies.

Meanwhile, ESG scores are essentially a risk assessment mechanism increasingly used by investment firms and financial institutions that force large and small companies to focus upon politically motivated, subjective goals which often run counter to their financial interests and the interests of their customers.

Companies are graded on these mandated commitments to promote, for example, climate or social justice objectives. Those that score poorly are punished by divestment, reduced access to credit and capital, and a refusal from state and municipal governments to contract with them.

ESG Targeting Agriculture

Many of ESG’s metrics, primarily those related to imposing environmental controls, are directly linked to the agricultural industry and food production. Examples of some of these metrics include: “Paris [climate agreement]-aligned GHG [greenhouse gas] emissions targets,” “Impact of GHG emissions,” “Land use and ecological sensitivity,” “Impact of air pollution,” “Impact of freshwater consumption and withdrawal,” “Impact of solid waste disposal,” and “Nutrients”—which, despite its innocuous-sounding name, is a metric that forces companies to estimate the “metric tonnes of nitrogen, phosphorous, and potassium in fertilizer consumed.”

Farmers and food producers use chemical fertilizers and pesticides for crop growth, in addition to producing waste biproducts, consuming substantial quantities of water, using vast swathes of land, and releasing what climate alarmists claim to be planet-ending carbon dioxide emissions.

“Europe, fully committed to the Paris Climate Accords’ decarbonization plan, provides a forecast of the agricultural and economic consequences likely to result from the ESG-reporting agenda,” the report notes. “After implementing strict ESG-reporting mandates, European banks, for example, became reluctant to lend to farmers with high nitrogen and methane emissions.   Reduced credit strained family farms.

“Europe’s emissions cap-and-trade policies exacerbated the problem and helped put generational farmers out of business,” the report continues. “Those policies also raised prices of farm-related energy and fertilizer, which, in turn, raised the price of food and groceries.”

‘Immolated’ Farming Industry

The report describes how the European Union’s commitment to the Paris climate agreement and associated ESG and net zero goals are undermining its agricultural sector and food security, which has lessons for the United States.

“Europe immolated its farming industry and made the continent’s food supply more expensive and less secure,” the report says. “Adopting similar policies in the United States will yield similar results.”

Federal and State Fixes

The report makes a number of recommendations for what can be done to “avoid the failures of net-zero policies.”

Federally, they suggest the United States withdraw from the Paris Climate Accords, repeal the “renewable energy” and carbon capture and sequestration subsidies in the Inflation Reduction Act, and consider banning federal agencies like the Farm Credit Administration from utilizing ESG policies.

On the state level, the report recommends states legislatures pass laws preventing “state agencies, fund managers, insurers, and lenders from using ESG criteria to guide investment decisions and set insurance policies and premiums.”

Enlisting the Private Sector

For the private sector Buckeye’s report suggests corporate boards from industries “that will be negatively impacted by ESG reporting and other net-zero policies should inform shareholders about how ESG-reporting requirements will affect operations and long-term shareholder value.” They also suggest farmers “decouple farming practices from their purported climate benefits and use the methods that are best for their farms, families, and produce.”

“Government climate-control policies ensconced in the Paris Climate Accords, the Inflation Reduction Act, and ESG-guided mandates carry a hefty price tag, especially for U.S. farms and the American consumer,” the report concludes. “The full price of climate control policies and directives needs to be measured and understood, especially the costs they will inflict on American farms and households.”

‘Unrealistic, Unattainable,’ and Costly

Buckeye’s analysis is important for putting numbers on the high cost of ESG and Net Zero policies, providing an evidence-based warning to Americans not to follow Europe’s path, says Cameron Sholty, Executive Director of Heartland Impact.

“This report shows what American and European farmers intuitively knew: that net zero carbon emissions are unrealistic, unattainable, and ultimately add cost through the supply chain and ultimately to consumers’ pocket books,” said Sholty. “Buckeye should be commended for putting the numbers to the insidiousness of ill-advised carbon-free farming pursuits.

“Its folly imposed by activists seeking to control the means of production and how we live and thrive in a civilized society,” Sholty said.

Tim Benson (tbenson@heartland.org) is a senior policy analyst with Heartland Impact.

For more on farm policy, click here.

For more on net zero, click here.

For more on ESG, click here.