Research: ESG requirements are changing the rules of the game in agriculture

“We need your data.” The message is repeated in emails and requests to Danish farmers. Not from the EU, but from dairies, slaughterhouses, banks, and other partners. Climate metrics, biodiversity, animal welfare; everything must be documented. It is no longer enough to deliver milk, grain, and meat. Now you must also deliver sustainability.

This is precisely the development that researchers from the Department of Agroecology at Aarhus University have mapped in a new scientific article. And the conclusion is clear: the pressure to provide ESG data is spreading like ripples in water, and it may have major consequences.

What does the research show?

The study analyses how the EU’s Corporate Sustainability Reporting Directive (CSRD) affects the Danish food sector. The directive requires large companies to report detailed information on climate, environment, and social matters. But according to the researchers, the pressure does not stop there.

“Although the CSRD is formally aimed at large companies, it also affects farmers indirectly. Large food companies must report across the entire value chain, and that starts on the farm,” says Niklas Witt from Aarhus University, one of the lead authors.

The researchers interviewed 13 key stakeholders in the sector such as ESG managers, agricultural advisors, and others, and found a clear pattern: Farmers are experiencing increasing demands to provide data to both companies and the financial sector.

Key findings

• Institutional pressures: CSRD creates legal requirements as well as social and market norms that reinforce the pressure.
• Farmers’ response: Most adapt not out of enthusiasm but because it is becoming a “license to operate.”
• Consequence: Increased bureaucracy and structural changes mean that small farms struggle to keep up.
• Uncertain effect: Whether reporting actually improves sustainability depends on the quality and harmonisation of the data.

“We’re seeing a trend where especially smaller farms may be pushed out. If you have 40 cows, it’s difficult to comply with all the requirements. Larger farms have more resources, small farms don’t,” says one study participant.

Deregulation changes the picture, but not the pressure

Since the study was completed, the EU has implemented an Omnibus package reducing the scope of CSRD. Fewer companies are now directly covered, and the number of required data points has been reduced. But according to Niklas Witt, this does not change the fundamental point:

“The pressure for data isn’t going away. It also comes from voluntary initiatives like carbon farming and regenerative strategies, and from banks requiring climate action plans. CSRD is only one piece of a much larger puzzle.”

Why does this matter?

The researchers conclude that reporting can support the green transition, but only if the data is used strategically. Otherwise, ESG risks becoming an expensive compliance exercise with little real impact.

“If we don’t harmonise data collection, it becomes both costly and ineffective. It’s crucial that we look at how reporting can drive innovation not just bureaucracy,” says Niklas Witt.

The pressure for ESG data is undoubtedly here to stay.

“The question is whether it becomes an engine for sustainability or a wall of bureaucracy. Our research suggests the answer depends on whether we can make data collection simple, credible, and strategic,” Niklas Witt concludes.

Fact box: CSRD in brief

• EU directive on sustainability reporting
• Applies to large companies from 2024
• After the Omnibus package: fewer companies included, but requirements remain extensive for those covered

More information

Collaborators: Department of Agroecology, Aarhus University
Funding: This work is funded by the MARVIC project, supported by the Horizon Europe Soil Mission (Grant Agreement No. 101112942) and the European Joint Program for SOIL (EJP SOIL), funded by the EU’s Horizon 2020 research and innovation programme (Grant Agreement No. 862695).
Conflict of interest: None

Read more: The publication “ESG reporting meets farmer – implications of the European corporate sustainability reporting directive for the agrifood sector” is published in the British Food Journal. It is written by Niklas Witt, Morten Graversgaard, and Martin Hvarregaard Thorsøe.

Contact: Niklas Witt, Department of Agroecology, Aarhus University. Email: niklaswitt@agro.au.dk