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The sector faces a dangerous convergence of economic risks and escalating climate and nature-related pressures. Traditional agricultural risk frameworks
focusing on market volatility, weather variability, and policy uncertainty are
no longer su昀케cient. We now confront environmental tipping points: thresholds beyond which natural systems cannot recover. According to S&P Global Chief Economist Paul Gruenwald: “There is no way back from a shock that
leaves the stock of natural capital below the tipping point… beyond a certain
threshold (the tipping point), the system is no longer able to self-repair or regenerate and totally degrades. The damage to the system is too large.”
This represents a fundamental shift in risk evaluation. Traditional 昀椀nancial models may dramatically underestimate real-world risks. Research
now directly links declining productivity with natural capital erosion,
highlighting the connection between environmental stewardship and
economic performance.
Domestically, Quebec’s Biodiversity Indicators for Investors and Nature Invest
are pioneering approaches integrating natural capital into investment analysis.
These tools recognize that while technological solutions matter, nature-based
approaches o昀昀er substantial potential.
The recent FAIRR report Climate and Nature-Based Interventions in Livestock
underscores this point. Despite their positive impacts across multiple planetary
boundaries, nature-based interventions remain chronically underfunded, accounting for only 0.1 per cent and 0.2 per cent of public and private climate 昀椀nance.
Capital 昀氀ows often target technological interventions with incremental bene昀椀ts
instead of nature-based solutions that could drive transformative progress. This
creates a “lock-in e昀昀ect” where intensive production continues at the cost of
long-term resilience.
The role of the 昀椀nancial sector
New approaches for new challenges
These emerging threats require new decision-making tools. Globally,
frameworks like Farm Animal Investment Risk & Return (FAIRR) climate
and nature assessment support investors with evaluation tools that go
beyond greenhouse gas emissions.
Financial institutions have begun acknowledging climate and nature-related
risks, but more ambitious action is needed. Many are retreating from climate
commitments when bold leadership is most necessary–as the Canadian AgriFood Policy Institute’s risk assessment shows increasing exposure to climate
disruptions.
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