Fertiliser Risks and Major Food Giants’ Disclosure Failures

Recent analysis by Planet Tracker reveals concerning trends among the world’s largest food companies regarding fertiliser use. The study examined 5,000 filings from 45 major companies, with combined revenues of $2.6 trillion, between 2018 and 2023. It brought into light that portion of these companies fails to acknowledge the risks associated with fertiliser misuse. This lack of transparency poses a threat to investors and the environment.

Fertiliser Use and Environmental Impact

Global fertiliser use is currently at least double the amount needed for sustainable food production. This overuse leads to the exceeding of the planetary boundary for nitrogen. Excessive fertiliser application contributes to 5% of global greenhouse gas emissions. It also results in nitrous oxide pollution and eutrophication, which threaten human health and biodiversity.

Corporate Disclosure Trends

The analysis found that 32% of the companies studied did not publish any fertiliser risk disclosures over the past six years. Only 30% addressed greenhouse gas emissions related to fertiliser. Despite the alarming quantities of fertiliser used, many companies provided only superficial details in their disclosures.

Efforts to Reduce Pollution

While 53% of companies discussed pollution reduction, only 39% focused on improving agricultural practices. A mere 30% mentioned greenhouse gas emissions linked to fertiliser. The report indicates that companies are becoming more aware of the risks but still lag in effectively communicating these issues to investors.

Differences Among Food Industry Sectors

Interestingly, food manufacturers are more likely to disclose risks associated with fertiliser than food producers. About 69% of upstream food production companies published at least one relevant report, while 81% of midstream manufacturers and 54% of downstream retailers did so. This discrepancy raises questions about the accountability of food producers regarding their direct use of fertiliser.

Geographical Distribution of Companies

The companies examined are based in 19 different countries. The United States has the highest representation with 10 companies, followed by the United Kingdom, Brazil, and China, each with four. This geographical spread marks the global nature of the issue.

Need for Improved Disclosures

The report stresses the need for improved disclosures from food companies. It calls for evidence of how companies assess the risks of fertiliser misuse. Financial institutions and investors should demand greater transparency on this critical issue.

Global Biodiversity Framework Targets

Target 7 of the Kunming-Montreal Global Biodiversity Framework aims to reduce pollution risks by 2030. This includes cutting excess nutrient losses to the environment by at least half. The slow progress in addressing these targets is concerning given the environmental implications of fertiliser overuse.

Questions for UPSC:

1. Critically analyse the impact of fertiliser overuse on global biodiversity and human health.
2. Estimate the significance of corporate disclosures in mitigating environmental risks associated with agricultural practices.
3. Point out the differences in risk disclosures between upstream and midstream food companies regarding fertiliser use.
4. What are the implications of exceeding planetary boundaries for nitrogen? How does this affect global food security?

Answer Hints:

1. Critically analyse the impact of fertiliser overuse on global biodiversity and human health.

1. Excessive fertiliser use leads to eutrophication, causing algal blooms that deplete oxygen in water bodies.
2. Nitrous oxide emissions from fertilisers contribute to climate change and respiratory health issues.
3. Overuse reduces soil health and biodiversity, impacting ecosystems and agricultural productivity.
4. Polluted water sources threaten drinking water quality, posing risks to human health.
5. Loss of biodiversity disrupts food webs and ecological balance, leading to long-term environmental consequences.

2. Estimate the significance of corporate disclosures in mitigating environmental risks associated with agricultural practices.

1. Transparent disclosures allow stakeholders to understand the environmental impact of corporate practices.
2. They enable investors to assess risks and make informed decisions regarding sustainable investments.
3. Disclosures can drive companies to adopt better practices, encouraging accountability and sustainability.
4. They help in aligning corporate strategies with environmental regulations and global sustainability goals.
5. Increased transparency can enhance public trust and brand reputation, leading to consumer loyalty.

3. Point out the differences in risk disclosures between upstream and midstream food companies regarding fertiliser use.

1. 69% of upstream food producers reported fertiliser risks, compared to 81% of midstream manufacturers.
2. Upstream companies often lag in acknowledging their direct exposure to fertiliser-related risks.
3. Midstream companies are more proactive in addressing the environmental impacts linked to fertilisers.
4. Discrepancies highlight a potential lack of accountability among food producers regarding their practices.
5. Greater awareness among midstream companies may reflect their role in the supply chain and consumer pressure.

4. What are the implications of exceeding planetary boundaries for nitrogen? How does this affect global food security?

1. Exceeding nitrogen limits contributes to climate change, which can disrupt agricultural productivity.
2. It leads to soil degradation, reducing the long-term viability of food production systems.
3. Water pollution from nitrogen runoff threatens freshwater resources, impacting irrigation and drinking water.
4. Failure to manage nitrogen levels can result in food supply shortages and increased prices.
5. Global food security is jeopardized as ecosystems become less resilient to climate-related shocks.