In some ways, the European Union is progressing ahead of the United States on sustainability issues, especially at the federal level.
An EU law from this year, the corporate sustainability directive, requires large and listed companies to disclose information based on environmental risk factors. And the European Commission’s 2019 Green New Deal included a roadmap for achieving key environmental goals such as net-zero emissions. The U.S. has struggled to achieve similar types of sweeping legislation. And beyond just laws and commitments, the EU actually managed to reduce greenhouse gas emissions by 20 percent below 1990 levels by 2020.
I wanted to take a deeper look at the agriculture and food sectors in these two regions. I spoke to Shay Eliaz, environmental, social and governance strategy leader at Deloitte, who has years of experience in agriculture both in the U.S. and the EU, to compare the sustainability approaches to this sector. I came away with three notable differences and three big similarities.
What are the differences?
1. Europe has a different food culture that lends itself to sustainability.
The first thing Eliaz identified was the base-level differences in the food culture of Europe. Europeans have had a long history of caring about the origins of a food product — wine from Spain vs. Italy or cheese from France vs. Switzerland. Identifying foods with their home countries has been a point of pride for Europe.
As a transnational coalition with this culture, the EU has had a framework to think about imports and exports since its inception. According to Eliaz, the historical focus on traceability for the quality and origin of products has set the EU up for sustainability tracking.
“In order to establish an understanding of what type of products come from which country, [the EU has] been very aware of the source of their foods and how it’s labeled,” he said. “It went through a rigorous process to approve and stamp those facts. Now, sustainability is just adding another lens to that. So it’s not a massive step to take.”
3. Europe is more sensitive to food inputs.
There are anecdotal stereotypes that Europeans care more about freshness, local foods and less reliance on processed foods than Americans. The reality is that it’s more than just a cultural preference. The European Food and Safety Authority (EFSA), the equivalent to the U.S. Food and Drug Administration (FDA), is actually more restrictive on food additives and farming inputs than the U.S.
At these levels of investments, you’ve basically jumped to the front of the line in terms of what you’re able to do.
According to Eliaz, the EU is incredibly sensitive to the application of fertilizers, pesticides, insecticides and herbicides, while U.S. farmers have a history of overapplying them. And Europe’s Farm to Fork strategy from 2019 heavily pushes organic foods in a way the U.S. market has not. The policy aims to increase the percentage of EU farmland under organic management from 8 percent to 25 percent by 2030.
3. Europe uses the regulatory stick instead of the investment carrot.
According to Eliaz, the regulatory environment of the European Union is more top-down, while the U.S. has a hard time being prescriptive and punitive.
“The European Union says this is where we’ve got to go and these are the things that are going to happen if you don’t do the right thing. These are the goals that each organization needs to meet,” Eliaz said. “Whereas the U.S. says, we want to head in that direction. And here are things that will help you get there.”
Eliaz told me that the Inflation Reduction Act has been looked on with envy by both the business community and climate activists across the pond.
“They can’t believe the U.S. can invest that much,” he said. “At these levels of investments, you’ve basically jumped to the front of the line in terms of what you’re able to do. So there’s frustration at the U.S.’s ability to make these types of investments and they believe as somewhat at the expense of Europe.”
While the European government has been bullish on telling sectors they need to decarbonize, the European market feels the investments from the U.S. government will allow the U.S. economy to progress faster and give it a competitive advantage over Europe, according to Eliaz. Europeans are looking for their own investment carrot instead of just the regulatory sticks.
1. No agreed-upon standard for regenerative agriculture.
Just like the U.S., Europe has been buzzing around the word regenerative without a standardized definition of the practices. While some methods such as no-tillage and cover cropping have become synonymous with the term both at home and abroad, it’s still not all-encompassing and won’t work for every crop, farmer or region. And without a more agreed-upon standard, regenerative agriculture remains more of a marketing term than an environmental one and is also one reason the EU is putting more of a push behind organic.
2. Subsidies are a problem.
In both Europe and the U.S., subsidies are the lifeblood of a farmer’s business. According to Eliaz, without the use of subsidies in Europe, farmers can’t get by as a third of farmer income is supported by them. According to the EU’s Farm to Fork policy the new Common Agricultural Policy proposed in 2018 that outlines subsidies aims to “help farmers to improve their environmental and climate performance through a more results oriented model …and an increased focus on investments into green and digital technologies and practices.” But there weren’t any more specific details.
In the U.S., subsidies have come under fire for mainly supporting soil-degenerative mono crops such as soy, wheat and corn. But in Europe, the subsidies have faced criticisms for being given to wealthy, industrial farms that don’t need them and landowners who never step foot on farmland and being inaccessible to smaller farms that need them.
3. The obstacles farmers face to make the switch to regenerative.
One thing Eliaz has heard repeatedly from farmers are the specific challenges they face making the transition to regenerative agriculture. The three constant barriers have been access to educational resources, technology and financing for regenerative agriculture.
“First, it’s really understanding what practices fall within [the regenerative] umbrella, what doesn’t and how you apply those,” he said, outlining the three problems. “Then buying technology that you currently don’t employ, understanding the costs associated with that technology and the knowledge associated with employing it is another barrier. And the question at the end is always, how do they ultimately finance the change? And how do they make sure that they are viable as a farm during that transition?”