Earlier this year, a landmark report set out to put sustainability at the top of the agenda for food companies and their backers. The report’s author tells us what drove the project.
Planet Tracker’s entire raison d’être is to change behaviours within financial markets. As such, it interacts regularly with an array of financial institutions – from fund managers in charge of equity and bond portfolios to asset owners such as pension funds – together with a panoply of different infrastructure providers, including credit agencies and custodian banks.
“The finance sector tends not to take a ‘systems view’ of the food industry,” says Planet Tracker Director of Fixed Income Peter Elwin, who is also head of the thinktank’s Food and Land Use Programme. “It tends to have a particular focus on manufacturers, retailers or food service companies, for example – in other words, quite a siloed, sector-based perspective. That’s driven partly by the way that portfolios are constructed, and partly by the way that lending banks think about the world.”
With that in mind, Planet Tracker wanted to produce a much more holistic view for stakeholders. This resulted in the Financial Markets Roadmap for Transforming the Global Food System. It lays out how financial institutions can think about their interaction with the food system and how they can use their capital to effect change within it and make it more sustainable.
“Whenever we issue any new piece of research, we do so on the basis that we’re also providing information – or ammunition, if you like – to other non-profit and civil society organisations, so they can use our findings in their own work. And in the Roadmap’s case, we’re addressing companies in the food system, too.”
The Roadmap’s message has significant resonance with the profession’s direction of travel. Planet Tracker is seeing massive growth in sustainability-related data and analysis, Elwin says, stemming partly from the influence of organisations such as the International Sustainability Standards Board, and developments in Europe around reporting legislation.
“At the same time, corporate uptake of the best-practice frameworks set out by the Task Force on Climate-Related Financial Disclosures and the Taskforce on Nature-related Financial Disclosures is on the rise. So, there’s a big push under way for companies to produce more information on their impacts – and to do so in a more comparable, credible and consistent fashion. And that’s where accountants have an enormous role.”
While Elwin acknowledges that there are many more companies in the food system than those studied for the Roadmap, the project’s focus on a slice of the industry’s larger players highlighted disclosure as a major area for improvement.
“One of the findings that struck us as really disappointing was that these companies are providing relatively little data around their sustainability impacts,” he says. “So there’s a very clear role here for accountants to organise the provision of that data, and to ensure that it’s comparable and credible.”
A bigger beast
Reception for the Roadmap among the organisations it set out to reach has proven extremely positive. Financial institutions that were financially and mentally invested in the cause of sustainability appreciate a holistic, strategic framework for thinking about the food system, Elwin says. “They can now plug it into various parts of their operations. In parallel, the many more institutions that are at a far earlier stage are happy that we’ve set out a menu of options to guide their work in this field. They don’t have to begin with the starter – they can go straight for the dessert, or whichever options best suit their portfolios and what they want their investments to achieve.”
Elwin points out that, at present, lots of financial institutions are approaching sustainability from a climate perspective. They understand the goal of net zero and what it may mean for their portfolios. They are familiar with the concept of carbon budgets and the implications of 1.5°C and 2°C warming. However, he notes, they would do well to widen their horizons.
“The food system is a much bigger beast, in the sense that it has a considerable impact on nature and is causing lots of harm through its action on society. So, if you turn it around and start to address those issues by tackling the food system head on, there’s huge potential for solving many of the challenges we’re facing around climate.”
For those reasons and others, Elwin is pleased with the Roadmap’s recent success in this year’s ICAEW Finance for the Future Awards, where the project won in the Driving Change in the Finance Community category. In addition, Planet Tracker as a whole was honoured as a Nature & Biodiversity Leader. “If you go to an institution or large corporate and tell its senior team, ‘This research of ours was ranked against initiatives from several other, really credible organisations and came first,’ that’s a big endorsement of the material as a serious piece of work.
Looking at how Planet Tracker would like to see the conversation develop in the future, Elwin says that there are a number of core streams to pursue. For example, a big shift away from industrial agriculture is required to reduce methane in the atmosphere. We must find different ways of farming animals that are less intensive, require less land to feed them and are more positive for society and the environment, says Elwin. We must also find different ways to encourage people to eat a much broader, far less meat-intensive diet. That means exploring alternative proteins such as lab-grown meat products, insect proteins or fungus-based foods.
“These multiple paths have the potential to help us use less land, which is critical. If we can get the food system to do that – or at least to not continue using more land – then we can dedicate that space to other resources, such as solar farms, biofuel factories and nature reserves. There’s a real risk that if we let the food system carry on as it is, it will simply use up the planet and we’ll be unable to make room for lots of positive things we need, in terms of nature-based solutions.”