FMCG regenerative agriculture targets: overview
- Many FMCGs set regenerative agriculture targets but lack credible, measurable goals
- Only 28% of companies assessed have quantitative targets, down from 35%
- Outcome-based targets remain rare, with just 4% setting clear goals
- Companies often fail to link targets to financially material climate risks
- Investors may question credibility without transparency, measurable outcomes and risk alignment
Interest in regenerative agriculture is amping up and big FMCGs often tout their commitment to it.
However, while FMCG giants are setting ambitious goals, a new report by institutional investor network FAIRR suggests that they are often falling short when it comes to making such goals credible to investors.
The report explores areas where many of the industry’s regenerative agriculture targets lack credibility. With such targets coming under increasing scrutiny, it is vital that large FMCGs persuade investors that these claims represent a realistic proposition.
Quantitative targets dropped
Many of the big FMCGs have targets and commitments around regenerative agriculture.
These targets are comforting for investors, explains Maria Montosa, technical specialist for nature research and engagements at FAIRR, because it means that companies are willing to be held accountable in the future for their ability, or lack thereof, to fulfil these targets.
Without providing specific targets and measurements to aim for, it is harder for regenerative agriculture companies to assure investors that they are protecting against the risks that such a method is meant to address.
However, according to FAIRR’s report, these targets are often not defined quantitatively.
For example, of 50 companies with regenerative agriculture commitments, only 28% have quantitative targets. This has actually gone down since 2023, where the figure was 35%. Companies such as Brazilian meat giant JBS no longer disclose quantitative targets.
It is unclear why these were dropped, suggests Montosa. She argues that when these goals are dropped, companies should be transparent about the reasons why. Not being so opens companies up to be accused of greenwashing.
“If they are not able to achieve those targets, it’s important to be transparent with investors about why: the challenges that they have experienced and what they are doing to continue working on more sustainable farming practices.”
Outcome-based targets remain low
Furthermore, outcome-based targets, such as achieving pesticide reductions or water savings, continue to be overshadowed by targets focused on deployment, such as the number of ingredients they aim to source from regenerative agriculture.
Outcome-based targets provide investors with a perspective of what companies want to achieve, says Montosa. Deployment-based targets, she says, don’t provide the same perspective.
Around 54% of companies say they are measuring outcomes, which is up significantly from 2023, where only 16% of companies were doing the same. This “is a good signal”, says Montosa.
Nevertheless, only 4% actually have outcome-based goals. This could be because of caution on behalf of companies, Montosa suggests. They may have begun to measure metrics, but are not yet sure how they can translate this into a company-wide target.
The report singles out PepsiCo and Danone as companies that have set outcome-based goals.
Putting project-level data into the context of company-wide targets can be complex, she points out.
Are targets linked to material risks?
When asked, many of the largest FMCGs point to resilience as their main driver for introducing regenerative agriculture practices into their supply chains. But in many cases, the targets they set are not explicitly linked to such material risks.
According to the report, many of the areas that companies focus on in their regenerative agriculture goals are not linked to the financial materiality of their business – in other words, the risks and opportunities from a material and financial point of view.
There are some exceptions. Climate change and water use are consistently linked to businesses’ financial materiality, with climate events and water scarcity seen as tangible risks.
However, while most companies include soil health and biodiversity in their commitments, their financial and material importance is often overlooked.
Material risks, such as soil degradation, ecosystem service disruption and reduced yields, are not focused on in detail. This, the report suggests, undermines the credibility of these targets because the rationale of their inclusion is not clear.
It “raises doubts” among investors when companies do not acknowledge financial risks, explains Montosa.
Industry gets behind regenerative agriculture
Industry’s relationship with regenerative agriculture is constantly shifting.
The Sustainable Agriculture Initiative (SAI), a coalition between large FMCGs, recently launched its Regenerating Together framework. This has the backing of several key industry players including Nestlé and Unilever.
The framework aims to enable regenerative agriculture to be measured and to align food majors on standards.
It is currently unclear how this will affect how food giants set regenerative agriculture targets, but it will certainly change how the industry approaches new agricultural practices.
While significant progress has been made, key industry players must ensure that their goals are credible, and that investors understand what their aims and desired outcomes are.
