Overview of the quarter
CONCERNS ABOUT POOR FARMING PRACTICES AND LAND STEWARDSHIP ARE NOTHING NEW. AS LONG AGO AS THE SIXTH CENTURY BC, THE OLD TESTAMENT PROPHET HAGGAI CASTIGATED THE PEOPLE: “YOU HAVE SOWN MUCH AND HARVESTED LITTLE.”
Agrarian economies barely changed from the advent of settled agriculture around 10,000 years ago until the industrial (1760-1914) and agricultural revolutions (1960s). These revolutions brought higher yields – more tons of final product per unit of land – which were essential to feeding the world’s burgeoning population. But they also required greater inputs, including fossil fuel based fertilisers, automation through diesel powered equipment and a larger expanse of agricultural land.
As a result, nearly a fifth of global greenhouse gas emissions come from agriculture, forestry and other land use. So, when we decided in September 2024 to gain exposure to a basket of agricultural stocks, we knew we’d be adding to the overall emissions of the Ruffer portfolio. But our focus is on putting our clients’ money where we see the best opportunities whilst encouraging the companies we invest in to be thoughtful about their sustainability practices. Thus we aim to help reduce emissions in the real world, rather than sanitising our portfolio for cosmetic purposes.
During the fourth quarter, we engaged with all seven companies in this agricultural basket. As the Greek agriculturist and poet Hesiod wrote (or rather sang) at least a century before Haggai, ‘Doing things in an organised way is best for mortal men, and disorganisation is the worst.’ In our spotlight piece, we explain how and why we developed our engagement framework to chart and support these companies’ emissions reduction and broader climate contributions. We also explore some of the challenges companies reported and the results of our engagements.
Our focus engagements this quarter included commodities producer Glencore, which we quizzed on issues such as health and safety, given recent fatalities at some mines. We also continued our long-standing engagement with steel manufacturer ArcelorMittal, delving into the detail of its recent safety audit and probing on the feasibility of its decarbonisation pathway. We also talked to beauty company Coty to gain a fuller understanding of how the board evaluates its own performance and how it takes into consideration the interests of shareholders and other stakeholders.
As usual, it was a busy quarter as we engaged with a large number of companies on a wide range of topics. We look forward to continuing and extending our work in the year ahead.