Feeding the world

04 November 2021

How consumers, businesses and investors can act together to embrace innovation in managing precious global food resources and take a bite out of climate change.

Feeding the world’s roughly 8 billion people has a huge impact on the environment. Leading studies suggest it accounts for about a quarter of all greenhouse gas emissions contributing to global warming. With the global population projected to grow to 9.8 billion by 2050, the nations of the world won’t be able to reach their climate targets without radical change to the food system. This means changes in the way food is produced, in the type of food we eat and in the way it is packaged.

Overhauling the food system will be crucial as we work towards a more sustainable future for our planet, and therefore a sustainable future for investors. We are seeing growing evidence of the links between good management of environmental, social and governance (ESG) risks and financial returns. Recognising that all Rathbones clients should have access to these new ideas and opportunities, we are pleased to be continually evolving a comprehensive and bespoke approach to responsible investing to deliver the best long-term results for all clients, while also reflecting their individual needs and values.

Producing food sustainably

As part of research into sustainable food production carried out by our ethical, sustainable and impact investing team at Rathbone Greenbank Investments (Greenbank), as far back as 2003 we found that although 60% of people wanted to buy local food, only 3% actually did. The price premium of organic and local food put shoppers off. A lot has changed since then as consumers, producers and investors now recognise the impossible demands we have been making on our planet. We all want to produce food in a more sustainable way but it’s hard to know where to start and what exactly ‘good’ looks like. Public awareness has soared and, according to the charity Food Foundation, it’s now the major supermarkets that are publishing more clearly defined targets and disclosing more performance data than other food retailers.

Following the publication of the National Food Strategy in July, Greenbank led an investor letter to the UK Government, calling on it to be ambitious in its response to the urgent challenges facing the food system and to introduce mandatory reporting on sustainability and nutrition metrics. This is a great example of responsible capitalism at work — companies and investors taking a long-term view and finding the opportunities that are out there to generate better and more sustainable financial returns while contributing to resolving some of the big problems facing our world.

Sustainable eating habits

It isn’t just a question of how we produce food – the type of food we eat matters too. It’s becoming increasingly difficult to meet the protein needs of a growing global population with food sourced from animals — such as meat, dairy products and eggs — and we need alternatives. Assuming the world’s population reaches 9.8 billion by 2050 as predicted, demand for animal-based food is expected to increase by 80% from 2006 levels, with beef increasing by 95%.

A May 2018 study on the environmental impact of food production, published in the journal Science, declared that avoiding meat and dairy products was the single biggest thing an individual could do to help reduce environmental harm — more than reducing air travel or buying an electric car.

Consumers are paying attention, and many are changing their eating habits. According to a 2019 report from Waitrose, a third of UK consumers said they had deliberately reduced the amount of meat they eat or removed it from their diet entirely.

As well as the personal health benefits of reducing red meat and dairy consumption, there are concerns about the impacts of industrial meat production on wider consumer health. Transmissible bacterial infections have been implicated in a series of global health scares, and antibiotic resistance – due to widespread use of antibiotics in livestock – is also a risk.

Green packaging

It isn’t just what we eat and how we produce it that matter, but how it’s packaged too. Plastic packaging is everywhere, because it’s cheap, lightweight and durable, and serves a wide range of important functions. However, plastic waste will impact our environment for generations to come.

Research in the July 2017 edition of the journal Science Advances showed that the vast majority of synthetic plastic produced from the early 1950s to 2015 — 6.3 billion of a total 8.3 billion tonnes — was highly durable waste. UK consumers alone were discarding about 35 million plastic bottles a year, which will take an estimated 450 years at least to degrade. But solving this problem isn’t simply a case of avoiding companies with any kind of exposure to plastic — plastic use is a complex issue and focusing too narrowly on the product could simply replace one problem with another.

One big challenge is finding alternatives to plastics. Very little of the plastic packaging produced in Europe is reused and only around 40% is collected for recycling. A report published in 2019 by DS Smith (a leading producer of recycled paper and packaging) in partnership with White Space Strategy found that 1.5 million tonnes of plastic (of a total of 20 million) could be replaced each year from just five areas of supermarket packaging across Europe.

In the fight against plastic, both consumers and businesses have a big role to play, and they are already taking action.

Consumers and businesses taking action

Greenbank’s research in December 2020 showed that 37% of people had reduced their consumption of single-use plastic in the last 12 months, and 23% were trying to buy fewer consumer products. Many are now taking steps to ensure their actions as a consumer are having a positive impact and this means making more sustainable choices about where they spend and invest their money. When choosing products or services, over one in 10 (13%) said they have made efforts in the last year to only buy eco–friendly brands where possible.

This growing awareness of the power of the consumer is having a direct impact on the businesses serving them, and some are committing to huge change in the drive to reduce packaging waste and the environmental damage it causes.

Not-for-profit charity Waste & Resources Action Programme (WRAP) and the Ellen MacArthur Foundation have developed a simple framework to help design systems that cut waste, recycle more and reduce the consumption of resources. Using fewer resources to make goods and designing them to be recovered and repurposed is not only good for the planet, but it can be good for the bottom line — maximising economic value while minimising the negative impacts of production and disposal.

A reduction in consumption could especially help where we’ve gone into ‘overdraft’ in terms of climate change, biodiversity loss, land conversion and agricultural expansion. If we continue to live beyond our planetary means, these environmental risks will inevitably translate into financial and social risks. Consequently, there are huge opportunities for reducing this risk and improving the outlook for long-term social and financial returns through innovation.

As investors we need to relieve pressure on companies to deliver quick returns and maximise short-term profits. Businesses, policymakers, investors and consumers need to work together to develop a system that relies less on physical resources, better serves the needs of all stakeholders and takes responsibility for the full lifecycle of what it produces.

There are huge opportunities for companies that react quickly and lead the way in sustainable food production and packaging, resulting in a healthy bottom line and a healthy planet. Working together, we can go a long way to taking a bite out of climate

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