ESG Integration Strategies as Green Finance Vehicles in Agri-Food Industry

Abstract

The growing global population and rising living stan dards are driving demand that significantly affects the scope of agricultural production. Permanent grasslands and forests are being converted into arable land, which reduces the soil's ability to sequester carbon and negatively impacts the provision of ecosystem services. There is a high potential for further development of investments in agriculture, where financial returns for investors can be combined with positive social and environmental impacts. Finding a balance between the ongoing changes in Europe, the interests of stakeholders, and broader societal objectives remains a major challenge. In recent years, the European Union has been developing approaches focused precisely on this crucial issue of sustainability as a "green pathway" for companies in the agri-food industry. These transformations, together with the growing interest in investments with positive environmental and social impacts, are fostering the expansion of green finance. Investors can play a key role in addressing global challenges, supporting sustainability, and reducing the negative effects of climate change. Their active engagement in the agricultural and food supply sectors can contribute to a more efficient and sustainable food production system while enabling them to achieve their financial objectives. This study builds upon the theoretical foundations of ESG reporting in EU member states and analyses its current implementation, with particular attention to the new legislative package Omnibus I and its challenges. Special focus is devoted to sectors related to the food supply chain, relevant legislation, and the communication of EU institutions with professional chambers and enterprises obliged to implement ESG reporting.