There is an increasing understanding about the interconnectedness of the climate and biodiversity crises – and, to a degree, an acceptance that both issues must be addressed together. But what is missing is true collaboration between all relevant stakeholders to ensure that their individual efforts truly sum up to change at large scale.
The food sector is uniquely positioned to tackle the intertwined climate–nature challenge. Global food systems are responsible for around 30% of global emissions, 70% of fresh water use and up to 80% of tropical deforestation and habitat loss. The food value chain also contributes almost a fifth of global GDP and is responsible for 40% of jobs globally. This, together with the scale and reach of the food value chain and the vast number of very small operators therein, means that “fixing food” is central to winning the climate and nature crises, without leaving people behind economically.
The finance sector can play a substantial role in such a transition to a sustainable food system. A factor that tends to stop growers from transitioning to more sustainable practices tends to be the cost, so bridge financing, subsidies and loans with sustainability incentives can make a meaningful difference.
However, even though the upstream part of the food value chain touches thousands of individual growers, approximately two thirds of the revenue is generated by less than 1% of companies. This means that the behaviour of large multinational businesses is key to achieving large-scale change in the food system. The equity holders of these companies can and must play a role in this transition.
Of course, they can exercise this influence through voting, at AGMs. It is also increasingly commonplace for shareholders to engage directly with management or the Board on specific issues. Collective engagement, where several shareholders unite to address a particular matter, has proved to be powerful too, particularly when the voices represent a meaningful part of the company’s equity.
As important as these tools are, none of them get to the root of the problem – why is there such a disconnect in the first place? Partly, perhaps, because the protagonists are acting in silos. On the whole, the conservation sector does not talk to shareholders, who do not talk to academics, who do not talk to corporates. For change to happen at scale, we need all stakeholders to talk to each other so as to understand the challenges and barriers to change and collectively ‘buy in’ to a solution that benefits all.
With a mission to foster such an open exchange and collaboration, UBP’s Biodiversity Committee, which is central to the governance of its biodiversity strategy, is comprised of representatives from Cambridge Conservation Initiative, Peace Parks Foundation, and the finance world, and chaired by world-renowned conservationist Tony Juniper. To identify the barriers impeding the progress of companies in the food value chain to protect and restore biodiversity without compromising the food requirements of society, we recently leveraged the collective expertise and experience of our Biodiversity Committee and portfolio holding companies during a workshop on the food sector.
Providing the space for such a collaborative exchange has proved highly beneficial to all stakeholders as they were able to talk openly and jointly identify challenges, thereby ensuring that they reflect the views of all relevant stakeholders. Specifically, three key barriers emerged: regulatory requirements (e.g. TNFD, SBTi etc.), the difficulty of measuring biodiversity, and the lack of consumer interest and awareness on nature. In a next step, we will work with the stakeholders to explore these topics in more depth with the aim of providing some solutions and stimulus for corporate change.
So, can listed equity managers support a shift to a more sustainable food system? On their own, around the edges, with other shareholders, to a degree, but as a facilitator of deep collaboration, yes absolutely.
Guest contribution by Victoria Leggett, Head of Impact Investing, Union Bancaire Privée
Don’t miss our event on food systems at Building Bridges 2023!