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February 06, 2024

EU Green Deal – How to solve CSRD reporting in the food industry with a farm management software

How can a farm management software, help you navigate through the challenges set by climate change and the changing financial and regulatory circumstances? Here are all the recent trends that could have a big impact on the food industry.

Sustainability regulations in the agri-food industry

Sustainability has never had such an important role in politics, the economy, or even in the everyday life of a farmer as nowadays. Most farmers and companies in the agri-food industry are familiar with the European Union’s aspiration for a more sustainable agriculture and economy, and also the regulations they have set in order to achieve it.

The Green Deal contains most of the EU’s sustainable ambitions, such as the commitment to reach net-zero CO2 emissions by 2050, or to work towards a circular economy.

To help achieve these targets, a number of measures and directives have been adopted to provide guidance, the latest of which is the CSRD and ESG, which are incorporated into national law in all EU member countries.

In order to be prepared for the changing economic and environmental circumstances, we need to be informed and aware of the new challenges and opportunities we have to face.

These mandatory reports mean that the data will become more valuable for the companies in the future.

What are the standards that we have to meet?

CSRD (Corporate Sustainability Reporting Directive) is a mandatory sustainability reporting directive adopted by EU member states. The CSRD aims to improve the transparency and consistency of the company's sustainable goals, and preventing suspicion of greenwashing.

Standardized reporting requirements enhance comparability of the companies efforts. For some large, listed companies, annual sustainability reporting is a standard practice that was previously done on a voluntary basis.

While the previous GRI standards also provided a comprehensive framework for sustainability reporting, the CSRD focuses specifically on environmental, social, and governance (ESG) factors and aims to harmonize reporting requirements across the EU.

From 2024 onwards, large, listed companies will be required to prepare an annual sustainability report. The number of firms obliged to report will grow each year, affecting even the listed small and medium-sized enterprises.

What exactly is ESG, and what do we mean by ESG finance?

ESG is a framework for assessing a company's performance and social impact based on environmental sustainability, social responsibility, and corporate governance practices.

Today, the role of ESG goes beyond its original function and is becoming increasingly important in the corporate world and companies' strategies. The public ESG rating of businesses can help investors and stakeholders evaluate and compare their non-financial performance.

ESG factors can significantly impact a company's long-term financial performance and risk profile, as well as their credit score. Investors who embrace ESG finance can ensure compliance with regulatory requirements and stay ahead of market trends. Companies with strong and transparent ESG performance are better positioned to attract customers, and investors, and they might get better credit offers from banks.

Some companies are ahead of us; here is how they did it.

Sustainability is a key element of the business strategy for most large companies involved in agriculture. As the regulations on sustainability reporting are becoming more restrictive across the EU, all companies need to adapt new practices in their operations.

Some major food companies have already taken steps to comply with the new legislation. They provide their partners with professional farming advice to show them the right farming practices. Many of them support farmers with financial bonuses if they track every step of their production and provide relevant data for them to prepare their reports.

One good example is Nestlé's LENs (Landscape Enterprise Networks) program. Nestlé pays attention to their suppliers farming methods; their aim is to get 50% of their raw materials from partners who use regenerative farming practices. Nothing demonstrates the company's commitment to sustainability better than the support and resources they have invested in their program to enhance these practices.

Besides Nestlé, several large companies, such as Unilever, Pannonia Bio and Cargill, have similar support practices for partners who can provide statistics of their carbon emissions during production and also for those who are actively following sustainable agricultural practices.

How can food companies source their data for their reports?

The value of data is increasing with these new EU policies. In addition, these data must meet certain criteria, such as reliability and accessibility, and they also have to be consistent.

Large food companies and crop processors that are subject to the regulations this year or in the coming years will need to have adequate data on their entire production chain. To follow every step of the supply chain requires precise data provision.

It is therefore important to target and favor partners tracking the production of the raw material so that traceability for the farm-to-fork strategy can be achieved. Using farm management software packages, such as AgroVIR can be the solution for sourcing data from suppliers. AgroVIR provides data that completes the need of any carbon calculator on the market with automatic data connection. This helps the reporting company to track the GHG emission of the supplied products. It is also possible to send out production directive to the farmers what is helping the efficiency of the tracking phase.

Most of the advantages arise on the producer side, as the use of farm management software not only helps in complying with directives, but also fully supports the operation of the agricultural company.

Providing a complex solution for agricultural businesses

It is possible that smaller agriculture companies and farmers will not be obliged to report directly under CSRD in the next few years, but they can benefit from using tools that help them manage and collect their data.

Farming inventory management is crucial for optimizing your input usage. Tracking pesticide and fertilizer usage, reduces overuse and, therefore, the environmental impact of production.

Since input prices have increased, this is even more important as input use can be traced, helping to support decision-making.

By analyzing historical data and real-time information, farmers can identify trends, anticipate challenges, and adjust their management practices to optimize performance and mitigate risks. For routine tasks such as stock management, field mapping, and crop planning, farm management software helps improve efficiency and productivity on the farm.

Beside the larger companies, several governmental and non-profit organizations are supporting the use of such digital systems.

Those who already and use AgroVIR as their stock management software, know how easy it is to record data.

There is no need to spend extra time manually entering data suitable for the buyers; you can simply prepare the necessary reports with the daily administration. In accordance with the new CSRD, AgroVIR also prepared the carbon emission calculator, thus helping farmers enter the programs of large food processing companies and discover new opportunities and partnerships. Because they know becoming part of the data ecosystem is a necessity.

Kinga Lantos
Martin Csaszar