How investors can transform the food system

The UK’s latest shortage of basic fruit and veg has served to remind us all that the global food system is in dire need of transformation. Inequality in food consumption, a nutrition gap between those who can afford healthy diets and those who cannot, and the high contribution of food systems to climate change are just some of the issues that prove how our current food system isn’t fit for purpose. Surging prices and growing populations are compounding its fragility, necessitating the need for urgent response. 

With increasing ESG regulations and changes in consumer behaviour and preferences, it’s crucial that we shift to a more inclusive and sustainable system. Fortunately, investors can help accelerate this change with their investments.

The problem

Firstly, some cold hard facts: 

  • According to the International Institute for Sustainable Development (IISD), an additional $265 billion needs to be invested annually by 2030 in order to end poverty and hunger.
  • Close to one-third (27 percent) of the world’s greenhouse-gas (GHG) emissions stem from food and agriculture—over half from animal farming. 
  • Currently, 2.5 billion tonnes of food is wasted each year. That’s the equivalent of 40 percent of all food. 

It’s clear drastic changes are needed in the transition to food production – and these need to be long term and sustainable.

The role of investors

Investors can directly fund sustainable agriculture projects or companies dedicated to researching innovative solutions for sustainable farming processes and technologies such as organic crop farming techniques or regenerative agricultural practices like no-till farming or agroforestry systems. This ‘ground up’ approach will improve soil health and increase resilience in the food system, while reducing carbon emissions and boosting profitability.

Investments should be made in responsible supply chains – those that produce food with less pollution and have traceability from farm to table. This means investing in low-carbon agriculture projects, as well as improving supply chain transparency through digital technologies such as blockchain. Supply chain traceability is of utmost importance; to help consumers and retailers make more conscious choices along the supply chain. 

Alternative proteins and lab-grown meats offer substitutes to consumers who have evolving preferences for ingredients, environmental impact and economic costs. Thanks to great research and development, this area is scaling up, and prices will continue to fall as meat alternatives become increasingly mainstream.

Investors can instigate innovation across their portfolios in order to reduce food and packaging waste. The UN Sustainable Development Goal (SDG) 12.3 sets the goal of halving per capita global food waste–from adjusting sell-by dates, portion size, and using eco-friendly materials for labels & packages – all while ensuring adequacy that still preserves the life cycle of food products from production through transport.

Engagement as a powerful tool

As a component of their ESG engagement strategies, investors can motivate companies to make greener choices across their production processes by making sure that their investment targets adhere to international standards for responsible agricultural production and processing. Sustainable food is unlikely to be a standalone investment theme, but it feeds into sustainability within the consumer sector, climate change, demographics, agriculture, production and circularity. Investors have a responsibility (or fiduciary duty) to put pressure on companies so that they develop environmentally friendly practices at every step of their supply chain operations – from sourcing raw materials responsibly, using sustainable packaging material and employing green transportation methods. 

Investors have an important role to play when it comes to transforming our global food system into one that is more inclusive and sustainable. By investing responsibly with an eye towards international standards on responsible agricultural production and processing, they can make sure that companies are held accountable for their actions throughout their entire supply chain operations. As investor demand increases for more ESG-focused investments into sustainable agriculture projects or innovative technologies, businesses will have no choice but to adjust their operations accordingly. This could be what finally propels our global food system towards a better future!

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