Investing in soil stewardship

Rewarding farmers for good soil stewardship requires financial markets that are willing and able to invest in soil management. Unlocking this investment in soils is the focus of the ‘Rewarding soil stewardship’ project led by Dr Nicholas Pawsey from Charles Sturt University.

The project is endeavouring to demonstrate a stronger link between good soil stewardship and financial profitability. This involves improving connections between researchers, growers and financial markets, and translating soil science for the finance sector. 

Dr Pawsey and his team recently completed an Australian Accountancy Standards Board (AASB) working paper that focuses on soil stewardship as natural capital. Titled ‘Improving the Visibility of Soil Health in Corporate Reporting’, the paper highlights the importance of capturing soil-related matters in financial reporting.

“Our study aimed to advance soil-related reporting practices and contribute to the development of the International Sustainability Standards Board’s draft requirements for disclosure of sustainability-related financial information (ED/2022/S1),” Dr Pawsey said.

“We engaged with ASX-listed agribusiness and investment entities to understand their preferences for soil reporting and determine if soil-related risks and opportunities are relevant to their investment decisions.”

The study found that while reporting on water, emissions and other sustainability-related matters is increasing, there is still limited discussion around soil management and risk. At present, many agribusiness investors lack a detailed appreciation of the nature of soil health. There is, however, growing recognition of the importance of soil in investment decisions.

Dr Pawsey said study participants indicated strong support for enhanced soil reporting by agribusinesses, noting soil-related information should be simple, concise and communicated in terms investors understand. To minimise reporting costs, this information should focus on data that is already captured by agribusinesses for management purposes.

The research will help identify approaches to enhance corporate soil reporting and priority areas for regulatory attention. This will aid in determining the decision needs of investors and help overcome some of the barriers to increased investment in soil stewardship.

Read the working paper

Watch the 2022 AASB Research Forum presentation