Race to Zero (RtZ) says a food system transformation is needed, modelling a 7% loss in value to the food and agricultural sector in the next eight years if business as usual models of land use and deforestation are continued.
- New report calls for action on rapid land use transition
- Climate change is a significant risk, and could have major financial impacts on food and agricultural companies.
- The shift away from deforestation and industrial land clearance is requirement, alongside uptake of nature-based solutions, for achieving the 1.5 goal.
The Race to Zero report says: “today’s global food system is beset with unsustainable – and avoidable – practices that render the food sector the single largest contributor to the ecological and climate crises.” It warns of severe financial and planetary consequences.
It says that recognition is dawning on decision makers that a land use transition as profound as the energy transition is coming and must be immediately prepared for. Basically its warning that the corporate and financial world’s have failed to effectively account for climate risk in food and agriculture.
Commodity-driven land clearance and deforestation must be halted by 2025 if there is any chance of a 1.5 °C world. This is the main message from this report, reinforcing the message given in the World Economic Forum report also released at UN Climate Week in New York.
Risks and opportunities of land use transition quantified
The Food and Land Use Transition report is a first of its kind by the Race to Zero as it presents scenarios or pathways of transition for 40 of the world’s largest food and agricultural firms worth over $2 trillion.
For each food and agricultural company scenarios range from the impact of specific policies such as carbon pricing, subsidies for nature-based solutions, due diligence obligations, and bans on deforestation, to the impact of changes in consumer attitudes and technologies.
This quantification approach has previously been tested with leading investors. In comparing risks and opportunities presented by climate change with the business as usual model, it seeks to understand the role that well prepared companies can play in mitigating potential losses in value to themselves, investors, and the planet.
It builds on policy work commissioned by the UN-backed Principles for Responsible Investment to which BlackRock, BNP Paribas Asset Management and Goldman Sachs Asset Management had input.
Climate change slashes global food output and inflates prices
Disruption in weather patterns have produced food shortages and exacerbated food price inflation. Disasters in the food supply chain caused prices to be 80% higher in April 2022 than in 2020. In the ten years to 2018 crop and livestock production losses in developing countries due to climate-linked disasters amounted to $108 billion.
This is becoming an embedded problem and global food companies are facing a quarter of their value wiped by 2030, equivalent to $150 billion in losses to investors. The report points out that this is not a one-off shock but “will be a permanent non-cyclical loss if investors and companies do not act now to protect value. “
Race to Net Zero urges commitment from all investor community
Commitments have been signed by 150 countries to halt and reverse forest loss and land degradation by 2030, and over 30 financial institutions with nearly USD$9 trillion in assets under management.
However the report says that is not enough. “The question is: given the risk and opportunity, why haven’t all financial institutions that have net zero commitments – with over $130 trillion assets under management collectively – made such a commitment?” ‘
The scale of the change necessary is ground-breaking, but essential to stave off the kind of disasters recently witnessed in Pakistan, which destroyed 2 million acres of crops and orchards amounting to an estimated crop loss of around $2.3 billion as well as displacing around 33 million people.
Nature-based solutions are number one
Both this and the WEF report turn to nature-based solutions (NBS). The WEF report stated that funding for nature-based solutions needs to triple from $133 billion per year today to $400 billion by 2030.
McKinsey produced a report with the WEF that explains why nature is key to climate mitigation. Results from the analysis show that it could account for nearly a third of the emission cuts needed by 2030 (50% from 2019 levels) in order to limit warming to 1.5°C above preindustrial levels. Standards and frameworks such as those put forward in the Integrity Council for the Voluntary Carbon Market’s (ICVCM) can ensure targets are achieved.
Race to Zero campaign
Race to Zero, responsible for this report, is a global campaign to rally leadership and support from businesses, cities, regions, investors for a healthy, resilient, zero carbon recovery that prevents future threats, creates decent jobs, and unlocks inclusive, sustainable growth.
Investments in meat alternatives and supermarket action on deforestation coming forward
These calls to action are not just bouncing off in an echo chamber. Inroads are being made. Investment funds are harnessing capital towards green technologies for food alternatives to meat. The greatest cause of deforestation is for soya for industrial meat production and cattle farming.
Supermarkets are also clubbing together to tackle deforestation in their supply chain.
