COP27: How to feed the world without destroying it
For some time now, the food system has been the elephant in the room in the climate conversation. It’s been far easier for policymakers to focus on fossil fuels and other more ‘trendy’ environmentalist gripes. COP27, however, appears to have changed that. In Sharm-el-Sheikh, on Saturday, November 12th, for the first time in history, a full day was devoted to the topic of food sustainability.
The first ever Food Systems Pavilion brought together over 15 international leaders in the food space spanning public, private and not–for–profit sectors, from farmers and youth to policymakers and climate scientists.
Why is this important? You may have heard that the food system is responsible for roughly one third of all greenhouse gas emissions (half of which come from animal agriculture) but what is less well known is that it currently receives only 3% of climate finance. That’s 22 times less than the total amount of capital invested in energy and transport!
This is an enormous divergence and one that we believe represents a significant opportunity for impact investors. COP is finally putting the flaws of the food system on the table. Policymakers now have little choice but to engage with these issues, which we believe is likely to unlock significant amounts of capital for the food transition in the years ahead.
What are the challenges of our current food system?
The Russian invasion of Ukraine this year has focused our attention on the need to ensure greater food resilience and security. UN projections indicate that our global population hit 8 billion in November 2022 and this number is expected to grow to 9.8 billion people by 2050 (UN 2022). As all these people need to be fed, our challenge going forward will be how we scale food availability and access without degrading the climate and the environment in the process. We therefore have two objectives:
- We need to meet the demand for healthy calories for an expanding global population; and
- We need to do so whilst at the same time transitioning agriculture, transport and supply chains and our own consumption to methods that are more secure and sustainable.
To avoid a complete food system breakdown, we must ensure that both of these objectives are met.
Inefficient and untenable agriculture
Agricultural yields have been rising for decades due to scientific advances in fertilisers and genetics. This has defied predictions that population growth would eventually outstrip supply. However, the way we produce calories today results in a shocking amount of waste both at the point of production and at the point of consumption. Moreover, the calories we are producing, we are producing in a way that is not just carbon intensive but which comes with gigantic environmental, social and economic costs. For example, the level of pesticides and preservatives that ‘naturally’ make their way into our diets have been linked to long–term health effects.
The devastating impact of meat in our food system
It is estimated that around 14% of all greenhouse gas emissions are attributable to livestock – a significant proportion of which is attributable just to cattle. Livestock also occupies over 80% of the world’s agricultural land across the globe despite only producing 20% of the world’s calorific supply. At the time of writing, it is estimated that over 49 billion animals in the US alone have been slaughtered for food this year.
Of the one third of global greenhouse gas emissions that are emitted by the food system, agricultural production including the production of agricultural inputs such as fertilisers account for 39% which is approximately 7.1 gigatonnes of CO2 equivalent (“GtCO2e”). Land use change accounts for 32% or 5.7 GtCO2e and supply chain activities account for 29% or 5.2 GtCO2e (UNEP 2022).
It’s not just about greenhouse gas emissions either. Our voracious appetite for meat has been linked to ecosystem collapse, biodiversity loss, depletion of freshwater and the pollution of terrestrial and aquatic systems that support our nature-based systems.
Climate finance as a bridge fuel
It has been estimated that the climate finance community must provide between $USD 300 to 350 billion each year until 2030 to support our transition to a more sustainable and climate–resilient food system (The Food and Land Use Coalition.) These numbers are achievable: the higher estimate is equal to less than 0.5% of the world’s GDP as of 2020.
The Food and Land Use Coalition outlines 10 ways in which climate finance can offer solutions to the challenges facing the food system. These are:
- Healthy diets – $USD 30 billion
- Regenerative agriculture – $USD 40 billion
- Nature protection and restoration – $USD 65 billion
- Healthy oceans – $USD 10 billion
- Diversified protein supply – $USD 25 billion
- Reduced food waste and loss – $USD 30 billion
- Stronger rural livelihoods – $USD 110 billion
- Stronger local food systems – $USD 10 billion
- Gender and demography – $USD 15 billion
- Digitisation of food systems – $USD 15 billion
These objectives span across the entire food system. While transforming agriculture is paramount to ensuring food systems are adapted and responsive to climate change, shifting to healthier and more sustainable (i.e. less carbon intensive) diets and food types and radically reducing food loss and food waste are also critical diagnostic solutions to our problems in food.
Tackling food challenges using science and technology
We believe that science and technology has a major role to play in tackling our food challenges. Hereunder are three investment areas where we believe companies can play a critical role in driving the sustainable food transition forward.
Precision Farming – e.g. CNH INDUSTRIAL, DEERE
- Agricultural innovation through new technologies which are aimed at increasing the yield of crops with the same amount of land, improving efficiencies in the use of input resources, reducing the negative impact of external / environmental risk factors, and reducing the environmental footprint of agriculture.
Agricultural Science – e.g. FMC, TAIWAN FERTILIZER
- Solving for the maximization of crop yields and the optimization of input resources through science and technology, including seed science (gene editing and breeding technologies, but not gene modification), fertilisers and crop protection products.
Water Technology – e.g. VALMONT, LINDSAY CORP
- Irrigation technologies aimed at minimizing the use of water in agriculture, including the development of advanced precision irrigation systems and IOT technologies that facilitate variable rate irrigation, wireless irrigation and the use of GPS positioning and guidance, which can be controlled remotely on smart devices.
Sustainable Packaging – e.g. SIG COMBIBLOC GROUP, O–I GLASS INC
- Fibre-based packaging derived from sustainable forestry, packaging materials made from aluminum and glass, which are both infinitely recyclable, and packaging materials from recycled organic matter that is compostable.
Food Safety and Testing – e.g. HALMA
- Innovating state of the art diagnostic solutions for food producers and processors who utilise them to test for potential contaminants, whether chemical (e.g. pesticides), viral, bacterial, or microbiological, pathogens, toxins, allergens and drug residues as well as genetic modification and species verification.
Supply Chain Technology– e.g. OCADO, JOHN BEAN TECHNOLOGIES
- Food processing technologies and solutions (such as cleaning, peeling, sorting and packing solutions) to food and beverage producers and grocery retailers. This sub-sector also captures companies that provide logistics technologies to the companies operating throughout the food value chain, such as automated warehouse logistics solutions.
Plant Based Food and Organic Food – e.g. CALAVO GROWERS, COSTA GROUP
- The development and production of plant-based foods and plant–based alternatives to animal products, including novel food & beverage formulations.
Ingredients, Flavours and Fragrances – e.g. IFF, BALCHEM
- According to the Plant Based Foods Association, the number one driver of all food purchases is taste. The reproduction of common colors, flavors, scents and increasingly, emulsifiers, has been long practiced at an industrial level in the food industry. Synthetic reproduction of certain flavors, scents and emulsifiers (like palm oil) can help alleviate not only some of the environmental impacts of growing those base inputs but also provide relief to any number of child and/or other disadvantaged workers globally. Further, as more food becomes plant based, there will be more demand for the colors, flavours and scents that consumers have grown accustomed to and these products will become a larger part of the science of food.
Our food system is now high on the agenda. There is a long road ahead but global leaders are finally coming to terms with the fact that progress in averting a and climate and environmental catastrophe needs to include a more resilient and equitable food system. We believe this has the potential to unlock swathes of capital as science and innovation will be paramount to both addressing both the calorie challenge and the sustainability challenge. This quote from Sabrina Dhowre Elba, Goodwill Ambassador for the UN International Fund for Agricultural Development, at COP27 sums up the situation nicely: “Trillions of dollars were made available to tackle the COVID-19 pandemic and its economic consequences. The same is needed for climate change. The same is needed for sustainable agricultural support. It is crucial to the well-being, and the food security, of us all.”
 Future of food, Untapped Opportunities, November 2022. Available at: https://futureoffood.org/insights/untapped-opportunities-climate-financing-for-food-systems-transformation/
 UN, World population projected to reach 98 billion by 2050, November 2022: Available at: https://www.un.org/en/desa/world-population-projected-reach-98-billion-2050-and-112-billion-2100
 Our World in Data, How much of the world’s land would we need in order to feed the global population with the average diet of a given country?, October 2017. Available at: https://ourworldindata.org/agricultural-land-by-global-diets
 UN, Emissions Gap Report 2022, October 2022. Available at: https://www.unep.org/resources/emissions-gap-report-2022
 FFairr, Good Food Finance Week: Investing in Sustainable Food Systems, May 2022. Available at: https://www.fairr.org/article/good-food-finance-week/
 Global Alliance for the Future of Food, Climate Financing for Food Systems Transformation Report, October 2022. Available at: https://futureoffood.org/wp-content/uploads/2022/10/climatefinancereport-english.pdf