Tomorrow Investor

Rethinking Food Systems in Light of Climate Change


Sustainability has become the buzzword in numerous fields, from banking and finance to heavy industry. As a result, companies strive to beat the clock when it comes to climate change. However, there are few sectors more highly impacted by it than food production and agriculture.

Global food production companies and farms have long been aware of the importance of sustainability. However, there is even more urgency now due to heightened public awareness of climate change’s impact on the world.

According to Deborah Perkins, global head of food and agribusiness for ING in Dallas, TX, “[Sustainability in food production is now] driven by consumers, investors, and even producers who are some of the first to feel the impact of climate change.”

Ironically, food production and agriculture are seriously underrepresented in talks regarding sustainable finance. Indeed, only 3% of all climate bonds issued were for initiatives related to the fields.

Different concerns for different areas

A key challenge for the food production sector involves understanding how sustainability can be done in various areas of production. Another concern is applying the concept in specialized fields and different parts of the world where cultural factors determine methods.

Right now, certain issues are seen as serious causes for concern. These include how meat processors can reduce greenhouse gas emissions, more efficient and less wasteful water usage in fruit cultivation, soil health, biodiversity, the reduction of packaging waste. 

Concerns also extend to the overuse of antibiotics in the meat and dairy industries. Sustainability is also raised with how the COVID-19 pandemic has affected the global agricultural workforce.

Most investors find these a challenge to comprehend, but this is where the work of independent assessors such as the Sustainability Accounting Standards Board and other compliance auditors come in. These entities can sit down with investors to discuss and explain current trends from the perspective of industrial peers, enabling companies to see things more clearly to develop relevant and effective strategies.

Another way by which issuers and investors can meet halfway is through cross-market initiatives regarding the credibility of green bonds or similar environmental loans. Key points in this area are the criteria for agriculture issued by the Climate Bonds Initiative in 202, specifically about who is eligible for green finance.

Unfortunately, the first edition of the CBI criteria is only focused on direct emissions from issuers; guidelines for supply chains have yet to be released. This is another issue for many issuers as the bulk of their environmental and social impact occurs upstream at the farm or smallholding level.

Nevertheless, analysts see larger volumes of investment being poured into sustainability in food production over the next several months. These will go a long way toward creating more relevant business models and more efficient technologies for feeding the world’s peoples.

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