Investors challenge EU’s decision on subsidies for farms using intensive farming

Despite being responsible for approximately 10% of greenhouse gas emissions in the European Union, political groups still have not agreed on the rules that should apply to the sector due to the large number of people that it employs.

This is already a contentious issue, but now, in a letter, a group of global investors has urged the European Commission to not allow intensive farming to be considered a sustainable activity.

The group, which represents over €3.1 trillion in assets, sent the letter after the European Parliament approved reforms under the Common Agricultural Policy (CAP). These reforms would provide smaller farms with additional funding if they use farming methods that are more sustainable.

The EU is currently in the process of labeling activities that it believes are climate-friendly, after which it hopes to lower greenhouse gas emissions in the region by incentivizing green investments.

Under the new regulations, at least 10% of funding should be allocated to smaller farms, providing they comply with certain environmental rules.

However, reaching a political agreement on which activities should be included in this list has proven to be a challenge. The farming industry, in particular, has been subject to lobbying by trade bodies, along with the nuclear and gas industries.

The group of investors, in this case, made its position public last month after European governments proposed that a large number of agricultural subsidies could get a “green” label.

Among the signatories to the letter are Legal & General Investment Management, Aviva Investors, Storebrand, and the international business of US asset manager Federated Hermes.

In the letter, the group says that subsidies may cause more harm than good, as intensively reared livestock had a negative effect on carbon emissions, biodiversity, antimicrobial resistance, water use, and soil health. For this reason, the letter states that intensive farming “should not be included in the EU Taxonomy as it stands”.