Sustainable food: the investment case
For businesses and investors, sustainable food will give rise to both opportunities and disruption.
Food production and consumption contribute well over 20% to global greenhouse gas emissions and account for more than 90% of the world's freshwater consumption. The likely growth in the world's population to 10 billion by 2050 coupled with a further shift in diets could increase food-related emissions by another 46%, while demand for agricultural land could increase by 49%. This is incompatible with the need to achieve a net-zero emission environment globally by 2050. If we are to meet this goal, we need to change what we eat, how much we eat, and how we produce our food.
The double burden of malnutrition
A sustainable global food system benefits the global eco-system as well as human health. But we have a long way to go to get there: today almost 700 million people are undernourished, while 40% of the world's adult population is overweight or obese. Some studies suggest that more than 20% of total deaths among adults aged 25 and older can be attributed to poor dietary habits, causing great human suffering, as well as damage to the economy.
We need to produce and consume more affordable, healthy food in order to restore the health of both humans and the planet. In order to do so, governments, businesses and citizens must get behind this topic and push for action.
Addressing food waste
Some of the challenges associated with malnutrition and a large environmental footprint of food could be addressed by targeting food waste. More than 30% of food produced is either lost or wasted — the equivalent of 2% of global gross domestic product in 2019. Eliminating food waste in the US and Europe alone would add 10% to the world's available food supply. But there is a need for solutions across the entire supply chain, as half of food loss and waste occurs during the production and handling phase, while 45% takes place in the distribution and consumption phase. Circular solutions (like food upcycling), smart packaging and cooling can help address food loss and waste along the food supply chain from the farm to the home.
Distribution of total food loss and waste across the supply chain
Handling and storage
Distribution and market
Discover your inner vegetarian
A shift toward a more plant-based diet appears inevitable, in our view, if the global food system is to become more sustainable. Research suggests that a plant-based diet not only has an emission intensity that is around 90% lower than that of a current average diet, but that it also has the potential to reduce the number of premature deaths among adults by around 11 million. We see strong growth potential for alternative animal-protein products and estimate that the market for alternative meat and dairy could grow from USD 14 bn currently to USD 1.4 trn by 2050. There could thus be many interesting investment opportunities in this space in coming years.
Agriculture goes high tech
If current food consumption trends continue unchanged, a shift in diet alone may not be enough to make the food system more sustainable. Further productivity improvements across the food supply chain and in both developed and emerging economies can be achieved through the large-scale adoption of new technologies.