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          2024 food industry investment outlook

          The Path to Sustainable Food: 2024 Outlook

          Sustainable Future of Food

          Written by: Tom Barker, CAIA

          Published: 26 January 2024

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          Key takeaways

          Health consciousness, climate concerns, and consumer awareness are driving a global shift towards sustainable food practices.

          The environmental and health impacts of meat production are gaining attention, leading to increased support for plant-based di-ets and policies promoting sustainable farming practices.

          Governments and organisations are following suit with regulatory support as well as initiatives like the COP28 agreement or the EU's Green Deal, creating a supportive environment for change.

          Introduction

          The global shift towards a sustainable future of food continued to gain traction in 2023 as individuals, businesses, and governments increasingly embrace eco-friendly practices, innovative technologies, and conscious consumerism to address environmental concerns and promote long-term food security. Here we examine some of the most pressing developments that took place last year and discuss what the future has in store for sustainable food.

          Health Focus Triggers Demand Shift in Food Industry

          2023 revealed the dramatic influence of health-focused pharmaceuticals on consumer food choices. Semaglutide (Ozempic, Wegovy) by Novo Nordisk and Eli Lilly’s Tirzepatide (Mounjaro)1 layed pivotal roles. By highlighting the health consequences of certain foods in diabetes management and weight loss, they spurred a notable decline in demand for unhealthy food products. This shift impacted traditional food and animal-agriculture based companies’ share prices, aligning with our investment approach that excludes investments in such firms.

          COP28 Spurs Pivotal Global Food Initiatives

          COP28 marked a significant turn in addressing food systems within climate action. Key highlights included the Global Stocktake acknowledging food’s critical role in climate response and the launch of the Alliance of Champions for Food Systems Transformation (ACF2) led by countries like Norway and Brazil. These initiatives underscored the urgency of sustainable agricultural practices and climate-resilient food production.

          UN FAO’s Transformative Roadmap

          The UN Food and Agriculture Organization’s roadmap, unveiled at COP28, is set to revolutionise agrifood systems, targeting their transition to carbon sinks by 2050. By focusing on areas like livestock and crop practices, the plan aligns with the Paris Agreement’s 1.5-degree limit and aims to eradicate world hunger.3

          Netflix’s ‘You Are What You Eat’ Catalyses Consumer Awareness

          Netflix’s documentary ‘You Are What You Eat’, released in January 2024, highlights the significant impact of diet on health and environment. Featuring an experiment with identical twins, it vividly demonstrates how different diets affect physical and mental health. This series is expected to amplify consumer awareness in the US and globally, encouraging a shift towards sustainable food choices. Its alignment with the FAO’s roadmap symbolises a key moment in progressing towards sustainable, health-focused food systems.4

          Understanding the Large Environmental Impact of our Food

          To understand why we need to transition to a sustainable food future, it’s important to gain knowledge and understanding of the challenges faced with our food value chain as it exists today.

          The visualisation below shows a summary of some of the main global impacts of food and agriculture5:

            • Food production accounts for over a quarter (26%) of global greenhouse gas emissions
            • Half of the world’s habitable land is used for agriculture. Habitable land is land that is ice- and desert-free
            • 70% of global freshwater withdrawals are used for agriculture
            • 78% of global ocean and freshwater eutrophication is caused by agriculture. Eutrophication is the pollution of waterways with nutrient-rich water
            • 94% of non-human mammal biomass is livestock. This means livestock outweigh wild mammals by a factor of 15-to-1.4 This share is 97% when only land-based mammals are included.
            • 71% of bird biomass is poultry livestock. This means poultry livestock outweigh wild birds by a factor of more than 3-to-1.5

          The environmental impacts of food and agriculture

          Tackling what we eat and how we produce our food, plays a key role in tackling climate change, reducing water stress and pollution, restoring lands back to forests or grasslands and protecting the world’s wildlife.

          Benefits of Reducing our Meat Consumption

          As we explored above, meat production has a number of large negative impacts on the environment, wildlife and our health. Viewed from the other side, this means that the benefits of reducing meat consumption are large. Here are some of these benefits:

            • Less land use for agriculture and more biodiversity: The use of land for agriculture is the main driver of biodiversity loss. Today, almost half of the world’s ice- and desert-free land is used for agriculture and most of this land is used by livestock. The total global land use for meat and dairy production sums up to 37 million square kilometers,6 an area as large as the entirety of the Americas — from Alaska in the North to Cape Horn in the South.
            • Benefits for the world’s climate: Reducing global meat consumption would also help to address climate change: it would reduce direct emissions from burping cows and nitrous oxide from manure, but also reduce emissions from deforestation and land use change
            • Less antibiotic resistance: Reducing the world’s meat consumption would decrease the use of antibiotics in livestock farming, a practice that contributes to the rise of antibiotic-resistant bacteria. This reduction could preserve the efficacy of existing antibiotics and the health of people around the world.
            • Lower risk of pandemics: Many infectious diseases originate in other animals. The high-density conditions in many meat production facilities create ideal environments for the mutation and spread of pathogens. Reducing global meat consumption would reduce the risk of zoonotic diseases and the risks of suffering another pandemic

          We think this future is possible

          If we are serious about tackling climate change, we need to reduce emissions from food production. There are several interventions for reducing emissions, including high crop yields through improved genetics and management, reducing food waste, adopting diets that maintain a healthy weight, implementing the best farming practices and shifting towards plant-rich diets.

          Tailwinds Powering Companies that are Leading the Food Transition

          The global movement towards sustainable food practices is gaining momentum, supported by a range of legislative and policy initiatives across the globe. Key examples include:

          EU’s Comprehensive Legislation and Policies7

            • Sustainable Food Systems Framework: Under the EU Green Deal and Farm to Fork Strategy, a proposal for a sustainable food systems framework aims to ensure fair, healthy and environmentally friendly food systems
            • Corporate Sustainability Due Diligence Directive: Adopted in 2022, this directive mandates corporate responsibility in global value chains, including food systems, to mitigate negative human rights and environmental impacts
            • Legislation on Food Contact Materials: The EU plans to revise this legislation to enhance food safety and encourage sustainable packaging solutions
            • Animal Welfare Legislation: Aiming for alignment with the latest scientific findings and public expectations, the EU plans to update its animal welfare laws.
            • Regulation on Sustainable Use of Pesticides: This regulation sets binding targets to reduce chemical pesticide use and risk by 50% by 2030
            • Deforestation-Free Products Regulation: Targeting high-risk commodities, this regulation aims to curb deforestation linked to key products like soy and palm oil
            • Common Agricultural Policy (CAP): Focused on transforming EU food systems, CAP includes rules for cooperative food supply chains and fair trading practices
            • Soil Strategy for 2030: Addressing soil degradation, this strategy envisions healthy and resilient soils across the EU by 2050

          Global and US Initiatives8

            • COP28: The UAE Declaration on Sustainable Agriculture, Resilient Food Systems and Climate Action, signed by over 130 countries, underscores the global commitment to food system transformation
            • US Inflation Reduction Act 2022: This Act allocates significant funding for climate-friendly farming practices and forest conservation

          Regulatory Drivers in the Food Sector9

            • Agricultural Science: The EU’s GMO regulation differentiates between gene editing and modification, with a more lenient approach to gene-edited foods
            • Sustainable Packaging: The EU focuses on sustainable materials for food packaging, along with directives to reduce single-use plastics
            • Precision Agriculture: Various EU, US, Indian and Australian regulations and initiatives promote precision agriculture techniques to minimise environmental impacts
            • Plant-Based and Organic Foods: Regulations from the US FDA, EU and agencies in Singapore, Australia and New Zealand are facilitating the commercial sale of plant-based and cell-based foods
            • Food Safety and Testing: Laws like China’s New Food Safety Law regulate plant-based foods and other food products to ensure safety and quality

          Collectively, these initiatives signify a robust support system for sustainable food companies, fostering innovation, consumer awareness and environmentally friendly practices in the food industry.

          References

          1

          Healthline, “Tirzepatide vs. Semaglutide: How Do These Medications Compare for Weight Loss?”, 2023. Available at: https://www.healthline.com/health/tirzepatide-vs-semaglutide

          2

          The Global FoodBanking Network, “Reflections on COP28: A Breakthrough for Food System Transformation”, December 2023. Available at: https://www.foodbanking.org/blogs/reflections-on-cop28-a-breakthrough-for-food-system-transformation/

          3

          Ibid.

          4

          Tudum, “Have the Twins from You Are What You Eat Stuck to Their Diets?”, Jan 2024. Available at: https://www.netflix.com/tudum/articles/you-are-what-you-eat-twin-experiment-documentary

          5

          Our World In Data, January 2024

          6

          Our World In Data, 2022

          7

          European Commission, “Legislative framework for sustainable food systems”, 2023. Available at: https://food.ec.europa.eu/horizontal-topics/farm-fork-strategy/legislative-framework_en

          8

          World Resources Institute, “Statement: 134 Countries Sign the Emirates Declaration on Sustainable Agriculture and Put Food High on the Climate Agenda at COP28”, December 2023. Available at: https://www.wri.org/news/statement-134-countries-sign-emirates-declaration-sustainable-agriculture-and-put-food-high-0

          9

          EFSA, “GMO”. Available at: https://www.efsa.europa.eu/en/topics/topic/gmo

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