The agricultural sector is a leading source of pollution in many countries, with excessive use of fertilisers and pesticides damaging freshwater systems, ecosystems, air quality and soil health.1 This is particularly concerning given that 95% of the world’s food production depends on healthy soils, yet nearly one-third of global agricultural land is already degraded.2  

Food systems are heavily dependent on natural ecosystems and biodiversity. However, climate change, driven by rising global temperatures, has disrupted these systems through sea level rise, extreme weather events and land-use change. These environmental shifts are already affecting agriculture and are expected to increasingly threaten food security by reducing long-term productivity.3  

Following the UK’s departure from the EU’s Common Agricultural Policy (CAP), there was a renewed opportunity to support local, sustainable food production. The UK government’s Sustainable Farming Incentive (SFI) was designed to promote more sustainable practices amongst farmers offering financial incentives. However, the scheme was unexpectedly closed early this year, leaving thousands of farmers without environmental funding they had planned for, causing many to face income losses.4  

The abrupt pause of the SFI scheme has drawn criticism, raising concerns over the UK government’s commitment to protecting nature and farmland. Still, as climate pressures grow, many farmers are proactively adopting regenerative farming techniques and tools to help tackle this issue. This approach, known as regenerative agriculture, aims to protect nature and biodiversity. While the term lacks a universally agreed definition, some of these approaches include soil restoration, encouraging agricultural diversity and ecosystem resilience.5  

In the past, many farmers accepted that increased farming activity would inevitably lead to soil degradation, driven by practices such as overuse of fertilisers, excessive ploughing and poorly managed grazing. However, regenerative agriculture challenges this mindset by focusing on restoring and maintaining healthy soil to support complex ecosystems. It was built on five core principles:

• Minimising soil disturbance 

• Keeping soil surface covered 

• Keeping the living roots in the soil 

• Growing a diverse range of crops 

• Integrating livestock 

Regenerative farming is gaining momentum because it enhances soil fertility, improves crop resilience to climate change, and over time, leads to higher crop yields and quality in an increasingly volatile market.  

Despite its potential, one of the key barriers to scaling regenerative agriculture is the lack of formal certification, unlike organic farming. Without clear standards or governing bodies, and with no widely accepted metrics to measure its environmental outcomes, it becomes difficult to measure impact or reward farmers.6  

But is this a reason to delay adoption? The answer is no. With farmers on the frontline of climate change, facing increasing vulnerability to extreme weather events, regenerative agriculture offers a pathway to transform the agricultural system. According to BCG analysis, while farmers may experience a short-term dip in profits when transitioning, long-term profitability can reach 70-120%, making it a sustainable solution for the future of farming.7 

 Businesses also play an important role in scaling up the adoption of regenerative agriculture. A lead example is Nestlé, which has invested CHF 1.2 billion into regenerative agriculture practices by 2025 across its supply chain. Its framework focuses on the regenerative agricultural principles, centring its restorative efforts on soil, water and biodiversity.8 To track and measure impact, Nestlé has developed a dedicated farm assessment tool, complete with tailored grading systems and KPIs, adapted to the specific conditions of each farm to ensure meaningful and accurate evaluations.9 

Danone has taken a similar approach, working closely with its suppliers and farmers to provide financial support and training to help reduce its greenhouse gas emissions through regenerative practices. The company has already exceeded its 2024 target, with over 39% of its key ingredients now sourced from farms practicing regenerative agriculture.10 Arla, first milk 

Conclusion:

Farmers cannot afford to wait for government incentives or policy guidance to begin transitioning to regenerative production systems. The urgency of the climate crisis calls for an accelerated shift toward farming that protects biodiversity and nature. Hesitation must give way to action as regenerative agriculture offers a sustainable solution to build long-term resilience in the face of climate change. 

The regenerative agriculture movement is gaining momentum, with more farmers moving away from conventional, extractive practices and adopting methods that protect and restore ecosystems. At the same time, businesses are increasingly stepping up to support this transition, driven by growing responsibility to reduce greenhouse gas emissions and improve accountability across their supply chains. 

 However, as with any emerging trend, there is a risk of greenwashing. The absence of clear definitions and performance standards creates room for exaggerated claims. It is important to distinguish between superficial commitments and genuine efforts. As Nestlé’s example shows, with the right tools and transparency, businesses can demonstrate measurable progress in supporting regenerative practices across their value chains. 

This standard sets a new bar for credible climate leadership in finance, placing action on deforestation, long-term ambition, and robust data at its core

To understand more, contact our Head of Climate and Carbon, Henry Unwin here.