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Professional Investor - Netherlands
April 2020

White paper Farmland: An environmental solution

Agriculture always seems a subject for fierce debate. It just seems that farming has been in the news just a bit more lately. And the news not always exposes farming from its most appealing side. This
paper aims to illuminate the other side, farmland and its role in nature. Nature can store carbon dioxide; nature can restore or regenerate degraded lands; nature can restore a badly functioning water cycle; and nature can restore rapidly degrading biodiversity. It can do all this while at the same time nourishing 10 billion people with more nutritious food. The Terraton Initiative1, in our view one of the
most positive initiatives for tackling climate change today, calls agriculture ‘the most advanced technology for addressing climate change’. The Initiative’s ambition is to use soil to store 1 trillion
tons of carbon from the Earth’s atmosphere and bring concentrations of greenhouse gases (GHG)
back to pre-Industrial Revolution levels.

Using our soils to sequester carbon is a natural climate solution and can be achieved through regenerative farming techniques that allow for plants to store carbon in the soil, for soils to infiltrate water and for biodiversity to thrive above and below the ground. When looking for nature based solutions one only has to imagine what an ideal biome or prairie looked like before the industrial revolution. Think of the many different types of plant and tree species, quite a distant picture from today’s monoculture landscape. So where is the catch? Will farmers still be able to make money when looking through the lens of their long gone ancestors?

We don’t think there is one. And yes, farmers will make a good living, and land will continue to offer a decent return. In this paper we will evaluate the actions available today, both on a macro policy level (which we will refer to as climate response options) and on a practical farming level (which we will refer to as nature-inclusive practices). We conclude that there should not be any dogmatic belief as to which policies or practices work where or when. There should only be the belief that if we do not start to make sensible steps in the direction of these policies and practices, it may be too late to achieve many of the climate and biodiversity goals that have been agreed to. At Van Lanschot Kempen Investment Management (VLK Investment Management) we believe that farmland offers an appealing, stable, yet relatively unexplored asset class. But investing in farmland passively is not a sustainable solution. An active focus on ESG is essential, both to explore solutions such as its role as a carbon sink, and to manage risks such as use of pesticides, soil erosion and biodiversity.

1. The Terraton Initiative is a global effort that seeks to remove one trillion of carbon dioxide from the atmosphere and use it to enrich our agricultural soils. In the face of a climate crisis, the world’s 5 billion hectares of farmland and pastureland offer a scalable opportunity to remove this excess carbon dioxide.
Download the white paper

This document of Van Lanschot Kempen Investment Management NV (VLK IM) is for information purposes only. The information in this document is incompletewithout the verbal explanation given by an employee of VLK IM. VLK IM is licensed as a manager of various UCITS and AIFs and authorised to provide investment services, and, as such, is subject to supervision by the Netherlands Authority for the Financial Markets. VLK IM explicitly wants to prevent the benchmarks being used in this presentation from being published or made available to the public within the meaning of the Benchmark regulation. Therefore, the benchmark data in this presentation is made available to you, exclusively to internal business and non-commercial purposes. No part of this presentation may be used without prior permission from VLK IM.

Capital at risk. The value of investments and the income from them can fall as well as rise and are not guaranteed. Investors may not get back the amount originally invested. Past performance provides no guarantee for the future.

Van Lanschot Kempen Investment Management (UK) Limited is registered in England & Wales with registration number 02833264. Registered office at Octagon Point, 5 Cheapside, London EC2V 6AA Tel: +44 (0)20 3636 9400. Authorised and regulated by the Financial Conduct Authority (FCA) with reference number 166063.

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