Food Systems: 6 Actions for Investors to Take Now

    Stockholm (NordSIP) – The global food system accounts for more than a third of total greenhouse gas (GHG) emissions.  It also greatly affects the climate crisis through biodiversity loss and is responsible for vast quantities of waste and pollution.  Dr. Zitouni Ould-Dada, Deputy Director at the United Nations Food and Agriculture Organisation (FAO) makes it clear: “We need to start taking this seriously and take responsibility across the board.  Unfortunately, we are going backwards in terms of achieving targets such as 1.5 degrees, the SDGs and for biodiversity loss.”  He is speaking at the launch of a new guide for the financial sector that aims to provide a Financial Markets Roadmap for Transforming the Global Food System, which was published on 27 March and produced by non-profit financial think tank Planet Tracker with the support of the Climateworks Foundation.

    Food industry’s vast scale and environmental impact

    In what they are calling the largest study of its kind, Planet Tracker (PT) analysed data from 400,000 companies from 160 countries, representing all sectors of the land and sea-based food industry.  PT estimates that food systems are supported by USD 8.6 trillion of private finance and that just 4% of this investment could be redirected to achieve significant positive change.  In an effort to distil the vast amount of information contained within the 145-page report down to actionable recommendations for financial institutions, it lays out six steps for them to take that could result in a 60% reduction in the food industry’s carbon footprint.  These steps are guided by four overarching food transformation themes: responsible supply chains, food system efficiency, pollution reduction and sustainable product offerings.

    Institutional investors can take immediate action

    The 6 actionable steps for financial institutions are designed to be complementary and compatible with other ongoing sustainability goals and targets.

    1. Require fully traceable supply chains: financial institutions tend to place their money with food manufacturers and distributors, whereas the greatest environmental impact is made further upstream. This means that investors’ engagement activities need to focus on improvements in supply chains, particularly with plant and crop farmers and the mechanical and chemical inputs that they employ.
    2. Halve food loss and waste: in the spirit of doing more with less, investors should encourage investee companies to meet the challenge of growing global food demand while remaining within planetary boundaries. This would imply improvements in data covering wastage throughout the value chain to inform action plans.
    3. Stop deforestation: typical actions in this area will be in tune with the UN biodiversity framework agreed at COP15, and reflect the food industry’s role as the principal driver of deforestation.
    4. Cut methane emissions by 45%: this action also depends on the provision of dedicated methane emissions data to inform actions plans to move away from animal protein, traditional rice cultivation and other food production and waste-related sources as stipulated in the Global Methane Pledge launched at COP26.
    5. Make agriculture/aquaculture systems regenerative: banks have the most direct influence in this area, whereas equity holders will have to apply pressure indirectly through engagement with manufacturers and distributors. This action depends on sufficiently granular disclosure of underlying agricultural practices from investee companies.
    6. Invest in alternative proteins: allocate capital away from traditional livestock-based value chains or engage with companies to encourage the necessary shift towards plant-based, lab-grown or insect protein.

    The widespread benefits of urgent action on food systems

    PT has sought to quantify the potential aggregate effect of these actions using a methodology similar to that used by the Science-Based Targets’ (SBT) in its Forest, Land and Agriculture (FLAG) guidance.  The potential 60% GHG reduction is accompanied by many other economic and social benefits.  Moreover, PT points to United Nations Race-to-Zero analysis highlighting the risks of a business-as-usual approach in the food industry, with companies in the sectors facing significant loss of value.

    Speaking at the launch of the PT report, Joao Campari, Global Leader of the WWF’s Food Practice said: “We need to become more and more impatient.  Two years ago, I wrote an article entitled ‘the last nine harvests’ that signalled how little time we have left to reach 2030 sustainability targets.  Since then, we have not moved the needle.  We are fixated with refining the problems we have in the food systems instead of seeking solutions, as imperfect as they might be.  Our reports are just tools for policymakers.  We need to urgently deliver solutions on the ground, in the water, for nature, climate and for people.”

    Image courtesy of Nat Aggiato from Pixabay
    Richard Tyszkiewicz
    Richard Tyszkiewicz
    Richard has over 30 years’ experience in the international investment industry. He has worked closely with major Nordic investors on consultancy projects, focusing on the evaluation of external asset managers. While doing so, Richard built up a strong practical understanding of the challenges faced by institutional investors seeking to integrate ESG into their portfolios. Richard has an MA degree in Management and Spanish from St Andrews University, and sustainability qualifications from Cambridge University, PRI and the CFA Institute.

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