Sustainability accounting worries cattle sector
By
Karen Briere
Reading Time: 3 minutes
Published: June 15, 2023
Livestock, News
Tammy Nemeth, originally from Saskatchewan but now based in the United Kingdom, said the requirements the International Sustainability Standards Board would impose on agriculture would be onerous and detrimental to the industry.
MOOSE JAW, Sask. — Cattle producers should push back against proposed mandatory climate-related financial disclosure standards, a United Kingdom-based energy and environmental, social and governance analyst recently told a gathering of cattle producers.
Tammy Nemeth, originally from Saskatchewan but now based in the United Kingdom, said the requirements the International Sustainability Standards Board would impose on agriculture would be onerous and detrimental to the industry.
The ESG standards are being rushed, she told the Saskatchewan Stock Growers Association’s 110th convention held in Moose Jaw June 4-6.
She said Canada has not yet implemented the standards so there is time to contact MLAs and MPs to express concerns.
Several organizations, including SSGA and the Canadian Roundtable for Sustainable Beef, wrote to the ISSB when it issued its first two standards a year ago.
The accounting standards are intended to create a global baseline of emissions reporting. Investors, lenders and insurers would make decisions based on these sustainability disclosures. Some companies already report on sustainability but do so voluntarily.
Canadian Cattle Association vice-president Tyler Fulton said the proposals are “alarming.â€
“It strikes me that this is just dripping with irony here that we as the livestock sector, that make our living on the landscape and really is the key to a sustainable business, that we are quite possibly, some of us, will be put out of business due to the new sustainability measures that will be put in place,†he said after Nemeth’s presentation. “It defies logic that the very people that are working the landscape and have figured out sustainable systems… will be the ones that will be shoved out the door.â€
Nemeth outlined three main elements about which farmers and ranchers should be concerned: mandatory Scope 3 emissions, water stress areas and the cost of compliance.
Scope 3 emissions include all emissions surrounding a particular product. For beef production this could include emissions from everyday operations, equipment, buildings, the livestock themselves, effluent, transportation, processing, refrigeration and storage, as well as those from the consumer taking the beef home from the store, preparing it and cooking it.
“That seems crazy, right? How on earth are you going to account for all that?†Nemeth said.
She said the ISSB has decided companies can estimate these emissions, but must have those estimates verified by a third party. There will be a one-year grace period to adapt.
“This is a bit of a problem because there is currently no agreement on how to measure scope 3 emissions accurately,†she said.
But banks, insurers and investors will have to account for the actual emissions on their books.
“In essence, banks will no longer care if you’re a credit risk. Instead they’re going to care if you’re an emissions risk,†said Nemeth.
There will be no credit for carbon sequestration taking place at the same time, she said.
Much of the cattle industry takes place in what are deemed high-risk water stress areas on the Prairies. Ontario and Quebec are not designated as such.
The ISSB wants to identify activities based on the World Resources Institute Water Risk Atlas tool, Aqueduct.
In his letter to the organization, SSGA president Garner Deobald said the requirement for baseline water stress should be removed.
“This controversial Aqueduct data is outdated and is not based on the detailed local data collected, curated and assessed by our regional and provincial authorities,†he said, adding the numbers lack context and ignore strict local regulations on water use.
Cattle grazing occurs in areas that might be designated as extremely high-risk because the land is unsuitable for crop production, but that doesn’t consider soil types and quality, he noted.
In terms of compliance costs, Nemeth said there will be a new layer of bookkeeping and reporting that could take more time. New software will be required and producers will have to pay the cost of third-party verification.
She said the industry must speak up now while it has time.
Although it may not be possible to stop the standards, there could be room to modify them.
Nemeth said the “unique circumstances of western Canadian livestock producers†weren’t addressed at all during ISSB discussions.
The Canadian Sustainable Standards Board is expected to consider these and other ISSB standards after they are issued later this month. Nemeth said some insurers have already pulled out of the plan but the top eight Canadian banks are still in.
The regulations would likely be implemented in fiscal 2024 or 2025.
“Most people have no idea this is being developed and being considered for implementation so quickly,†she added. “Talk about it at every opportunity.â€
SSGA members later passed a resolution to lobby all levels of government to prevent ESG implementation. Another resolution noted that ESG is a social credit scoring system and that SSGA should lobby against all social credit tools.
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