Investments in an environmentally sustainable food system: “Eating its own capital”
The “Putting Money On The Menu” event hosted by the Food Foundation sparked a plethora of conversation about the potential contributions investors could make to a world food system that may need some adjustments.
At the moment, 2.5 billion tonnes of food are lost annually. That equates to forty percent of all food. In case this number wasn’t shocking enough, one of the event speakers used a metaphor to put it in perspective: “you couldn’t invest in a car business that scraps four out of every ten cars.”
However, what steps can be taken to persuade investors to back the food industry with their actual money? Numerous speakers at the event agreed that it was crucial to give them information and encourage them to ask questions of businesses regarding the specifics of every stage of their supply chain.
Putting money into longevity
Tim Benton, Research Director of Emerging Risks at Chatham House, characterized the global food system as “very fragile” and clarified that there is a persistent “cheaper food paradigm.”
“We have more meat than livestock, and there are more calories available than nutrition. We are aware that there will be more extremes, global interconnectedness, and global interconnected risks,” Benton said.
Benton declared, “All of our incentives are wrong,” implying that authorities and the food industry should start considering long-term solutions as opposed to band-aid fixes. We must consider how we can collaborate with policymakers to ensure that market incentives are appropriate.
Investing in environmental sustainability
Throughout the event, the word “sustainability” was used a lot. It was evident from most speakers’ presentations that food systems must be sustainable in order to benefit the environment.
Rune-Christoffer Dragsdahl, Secretary General of Dansk, Vegetarisk, Forning (DVK), emphasized the Danish Green Deal by examining one nation in particular.
Denmark has set a “ambitious” goal to reduce its greenhouse gas emissions by 70% by 2030 (compared to 1990 levels) and achieve climate neutrality by 2050, according to the European Commission.
The European Commission has stated that “significant investments and reforms across the economy” will be required in order to meet this goal.
Dragsdahl emphasized the investment that is being made in Denmark and said that there has been international funding, specifically for plant-based foods, totaling about €100 million.
A national action plan for plant-based foods was decided upon. Nine of the ten parties in the legislature supported it, and some of them made it a top priority, according to Dragsdahl.
The University of Bath reports that plant-based burgers can result in up to 98 percent lower emission levels of greenhouse gases than beef burgers. Furthermore, compared to animal products, plant-based products generally require less water, agricultural land, and pollution.
Actually, studies have shown that plant-based foods often have superior nutritional profiles than farm-bred foods. For example, one study found that, according to the UK’s Nutrient Profiling Model, 40% of conventional meat products were categorized as “less healthy,” compared to only 14% of plant-based alternatives.
So, given that global investment is already being made to support changes in our food system, what more can be done?
Dr. Martin Buttle, Better Work Lead in CCLA Capital Investment Management, countered that offering “data for investors is significant” so that they can understand exactly what food businesses are accomplishing when it comes to bringing about a positive change to the planet. Dragsdahl argued that “education and connecting is important” when it comes to getting shareholders clued up.
Sophie Lawrence, Lead for Stewardship and Engagement at Rathbone Greenbank, concurred with Buttle, saying that “[data] is so important from an investor’s perspective.”
“As investors, we benefit from having an overhead perspective that allows us to identify the long-term risks we face.”
In an upbeat statement, Lawrence said she believes “we are getting better at gaging the systematic risks,” implying that investors are able to assess the advantages and possible drawbacks of making investments in food systems.
Lawrence told the audience that she believes there is a “moral and social element to act” and that more interaction with ministers and government representatives is necessary to “decide what the right metrics are for health, animal welfare, and the environment.”
You may also like:
Food security in emerging nations: issues and remedies
Are drinks the secret to increasing cannabis use among consumers?
Managing the lack of labour for mushroom picking
Deal or not a deal on an investment?
The International Institute for Sustainable Development (IISD) estimates that an additional $265 billion in annual investments will be required if poverty and hunger are to be eradicated by 2030.
But what exactly do food investors need to know before they commit, given the myriad issues the world is currently facing, including COVID-19, the conflict in Ukraine, food inflation, and the crisis of rising living expenses?
“We need to help investors understand that we need to do more with less,” said Peter Elwin, Director of Fixed Income and Head of the Food & Land Use Program, during his speech at the event. More people must be fed while causing less damage to the environment.
Elwin continued, despite the apparent simplicity of his point, that the food sector must also prioritize preserving environmental systems, enhancing the food production process, and enabling more sustainable consumption.
Elwin gave investors some advice, stating that it was critical to put money into “responsible supply chains,” or those that produce food with traceability and less pollution.
While “being an investor is not going to change consumer behaviour,” Elwin asserts that they can “inform companies” to make more environmentally friendly decisions throughout their production process.
When it comes to investing in food, it appears that now is the time to act, particularly since many businesses are supporting the global climate change objective of keeping global warming to 1.5 degrees.
A 1.5 degree future, according to Rachel Crossley, Head of Stewardship Europe at BNP Paribas and Asset Management, “is impossible to achieve without food system transformation.” Therefore, in order to help them realize how big of an impact their contribution could have, they just need to have “conversations about how businesses are aligning with long term [climate change] goals,” as many are hoping that there are willing investors waiting in the wings to step up and make a difference.
Elwin, however, asserted during the event that the current food system is “eating its own capital,” so it was clear that reforms and wise financial management were required to move the focus from band-aid solutions to long-term, sustainable plans for the food industry.