Food – The overlooked frontier in tackling tropical deforestation and climate change

Climate change is getting a lot of airtime these days. Much of the conversation around how consumers and investors should mitigate climate change has centred on the contribution to human-made greenhouse gas emissions (GHGs) and the need to transition to renewable energy.

However, far less attention has been drawn to another industry which, as it happens, contributes about 26% of all human-made GHGs[1] and is the leading cause of global tropical deforestation and biodiversity loss: Our food system.

Why is our food system so destructive? There are a number of factors and contributors, however the meat sector is by far the biggest offender.

Brace yourself for this… Half of the world’s habitable land (i.e. land that is ice and desert-free) is used for agriculture. And 77% of that agricultural land is used for either grazing livestock or growing feed for livestock.[2]

As the human population has grown, demand for meat has increased. Cattle and soy production are now the leading cause of deforestation in the Amazon biome. Nearly 80% of all soy produced is used to feed livestock, including cattle.[3] 

As the image below shows, the supply chains for beef and lamb/mutton emit more kilograms of carbon dioxide equivalent per kilogram of product than any other type of food.[4]

Even more worryingly, the overwhelming bulk of this contribution comes from the first two stages of the food supply chain alone, land use change and farming.

“Land use change” refers to the conversion of forests into agricultural land. Deforestation not only leads to the emission of huge quantities of carbon dioxide through forest biomass combustion and decomposition, but it also alters soil carbon content enormously. According to the World Resources Institute, the loss of tropical forests contributed some 4.8 billion tonnes of carbon dioxide per year globally between 2015 and 2017, about 8-10% of total human-made GHGs.[5]

The second stage is farming, where fertilisers, manure, farm machinery, and livestock also release staggering quantities of GHGs into the atmosphere. Take the humble cow. Over 12 months, just one of these animals can produce up to 300kg of methane – a gas that traps roughly 28 times more heat than carbon dioxide over a 100-year time scale and 84 times more heat than carbon dioxide over a 20-year time scale![6]

Comparatively, the processing, transport, retailing, and packaging stages of the supply chain that follow have a much smaller GHG footprint. Combined, these later stages contribute only around 5-10% of global human-made GHGs.[7]

Meanwhile, greenhouse gas emissions from the supply chains for plant-based products can be up to 50 times lower than meat products.[8] Not to mention the numerous studies claiming that plant-based diets can help to reverse a raft of food-related illnesses like cardiovascular disease, type 2 diabetes and obesity.

So, it is the types of foods that we are eating that are driving the majority of GHG emissions in the food system. Emissions derived from the way we process, transport, store and package food are negligible in comparison. Accordingly, what we eat is far more important than where our food comes from in terms of reducing GHGs and deforestation.

An example I like to give is that the impact of a locally-sourced steak from your local farm shop is far far worse than an avocado that’s travelled over five thousand miles from Mexico.

Consumers around the world are really beginning to wake up to these realities. This growing environmental and health consciousness has the potential to be both the single biggest thing we can do to reduce deforestation in places like the Amazon rainforest (largely attributable to beef production) and Borneo (largely attributable to palm oil production) and reduce human-made GHGs attributable to the food system. It also has the potential to unlock a raft of new investment opportunities.


Plant-based meat and cultured meats

This year’s pandemic and the living adaptations we have had to make have only served to accelerate this “conscious” rethinking of our purchasing habits. Around 81% of French consumers surveyed by OpinionWay in May 2020 said they intended to purchase more environmentally-friendly food after the lockdown.[9] When asked why they were cutting back on meat consumption, nearly half of respondents to a 2019 Gallup poll cited environmental concerns as a major driver.[10]

This is paving the way for a large increase in the sale of meat alternatives in the future.

Management consultants AT Kearney forecasts that conventional meat’s share of the global meat market will fall from 90% in 2025 to just 40% by 2040.[11] Over the same period, the share held by novel vegan meat replacements (i.e. plant-based meat alternatives like the Beyond Burger and Impossible Burger) is expected to rise from 10% to 25% while lab-grown meat (i.e. sometimes called “cultured” or “cellular” meat) is slated to take a 35% position.[12]

Venture capitalists have long anticipated this trend, with funding for Foodtech and Agtech startups reaching $19.8 billion in 2019, more than double the amount raised in 2016 which was only $8.6 billion.[13] Meanwhile, public investor hype around the sector has been well-and-truly fanned by the IPO of Beyond Meat. Notwithstanding this year’s pandemic, shares in the plant-based meat producer have risen from below US$75.60 on 31 December 2019 to US$142 as of 27 November 2020. In the same period, shares in a more recent entrant to the public markets, Else Nutrition, which makes plant-based baby food, have risen from CA$0.53 to CA$4.50.[14]

The value of the plant-based meat market is now on track to rise from US$10.1 billion in 2018 to US$30.92 billion in 2026.[15] And as this occurs, more and more of these private companies will go public.

To make the most of this opportunity, we have made plant-based foods one of the nine sub-sectors tracked in our Sustainable Future of Food theme. Together with Tematica Research, we have identified the global publicly-traded companies that derive all or a large proportion of their revenues from plant-based food. And given that conventional meat consumption, particularly beef, is incompatible with a sustainable future of food, we exclude companies producing foods derived from land-reared meats from the theme.

Beyond plant-based food

It’s not just meat alternatives that stand to benefit from increasing environmental consciousness amongst food consumers. There are many other sectors where companies are innovating to reduce the carbon footprint of the food supply chain.

One excellent example that we zone in on in our Sustainable Future of Food theme is “smart agriculture” or “farming 4.0” as it is sometimes referred to. This refers broadly to the advanced technologies including robotics, sensors, software and aerial and satellite imagery that are being combined with big data and cloud-based solutions to enable more precision and automation (and therefore resource efficiency) within the farming process.

Whether its monitoring moisture levels in fields, assessing the ideal time to pick the harvest or the precise application of input resources like water, fertilisers, pesticides and fungicides, these new platforms allow farmers to provide each plant with exactly what it needs rather than holistically spraying an entire field. In doing so, farmers can save on input resources, reduce GHG emissions and reduce the nasty environmental side effects associated with surface runoff, including water eutrophication.


Ultimately, change starts with the consumer. And with consumers around the world becoming better and better informed about the environmental (and, importantly, health) impacts of what they eat, the transition to a more sustainable food system is finally becoming possible. The companies driving the technological innovation across the food value chain and the companies designing and producing the new food products that the climate-conscious consumer is demanding will be best positioned to benefit from the tailwinds of this transition.


Related ETF

FOOD: Rize Sustainable Future of Food UCITS ETF



[1] Poore, J., & Nemecek. (2018). “Reducing food’s environmental impacts through producers and consumers”, Science, volume (360/6392) [online]. (Available at: https://science.sciencemag.org/content/360/6392/987) (Accessed: 30 November 2020)

[2] Ibid.

[3] World Wildlife Federation (WWF), “NATURE IS THREATENED BY UNSUSTAINABLE PRODUCTION AND CONSUMPTION OF SOY” [online]. (Available at: https://wwf.panda.org/discover/our_focus/food_practice/sustainable_production/soy/?) (Accessed: 30 November 2020))

[4] Poore, J., & Nemecek, 2018 (cited in Our World in Data. (2020). “Environmental impacts of food production” [online]. (Available at: https://ourworldindata.org/environmental-impacts-of-food) (Accessed: 30 November 2020))

[5] World Resources Institute. (2018). “By the Numbers: The Value of Tropical Forests in the Climate Change Equation” [online]. (Available at: https://www.wri.org/blog/2018/10/numbers-value-tropical-forests-climate-change-equation) (Accessed: 30 November 2020)

[6] Intergovernmental Panel on Climate Change (IPCC), (2013). “CLIMATE CHANGE 2013: The Physical Science Basis”, p.714 [online]. (Available at: https://www.ipcc.ch/report/ar5/wg1/) (as cited in Our World and Data. (2020), “Greenhouse gas emissions”. [online]. (Available at: https://ourworldindata.org/greenhouse-gas-emissions) (Accessed: 30 November 2020))

[7] Poore, J., & Nemecek. 2018 (cited in Our World in Data. (2020). “Environmental impacts of food production” [online]. (Available at: https://ourworldindata.org/environmental-impacts-of-food)) (Accessed: 30 November 2020))

[8] Ibid.

[9] Opinionway. (2020). “Les Français et la consummation de produits alimentaires pendant le confinement” (as cited in Statista, (2020). “Intention to buy more sustainable food products after the lockdown in France 2020”, [online]. (Available from: https://www.statista.com/statistics/1124319/environmentally-friendly-food-purchase-intentions-after-lockdown-france/))

[10] McCarthy, J. (2020). “Nearly One in Four in U.S. Have Cut Back on Eating Meat”. Gallup, [online]. (Available from: https://news.gallup.com/poll/282779/nearly-one-four-cut-back-eating-meat.aspx) (Accessed: 30 November 2020)

[11] A.T. Kearney. (2019). “How Will Cultured Meat and Meat Alternatives Disrupt the Agricultural and Food Industry”, [online]. (Available from: https://www.kearney.com/documents/20152/2795757/How+Will+Cultured+Meat+and+Meat+Alternatives+Disrupt+the+Agricultural+and+Food+Industry.pdf/06ec385b-63a1-71d2-c081-51c07ab88ad1?t=1559860712714). (Accessed: 30 November 2020)

[12] Ibid.

[13] AgFunder. (2020). “From AgFunder with love: Global agrifoodtech funding reaches $19.8bn in 2019”, [online]. (Available from: https://agfundernews.com/from-agfunder-with-love-global-agri-foodtech-funding-reaches-19-8bn-in-2019.html). (Accessed: 30 November 2020))

[14] Bloomberg, 30 November 2020.

[15] Reports and Data. (2019). “Plant-based Meat Market To Reach USD 30.92 Billion By 2026”, [online]. (Available from: https://www.globenewswire.com/fr/news-release/2019/10/14/1929284/0/en/Plant-based-Meat-Market-To-Reach-USD-30-92-Billion-By-2026-Reports-And-Data.html). (Accessed: 30 November 2020)

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