ESG Feature – Food
This means producing more from a fixed landmass, so more intensive farming is required. But some modern agricultural practices kill the microbes that keep the soil fertile thus mak- ing it harder to grow produce. Agriculture also consumes 70% of the world’s freshwater, according to the World Bank, which predicts that demand for the mineral will increase by 15% if enough food is to be grown in 2050.
Then there is climate change. The industry is a major emitter of climate-harming gases, so it is clear that new ways of pro- ducing food will have to be found. “We have to ask ourselves, what the food system needs to look like in 10, 20, 50 years’ time to feed 10 billion people while combating climate change and reversing nature loss,” says Oliver Williams, global head of agricultural investments at Manulife Investment Management.
A broad universe To produce more food of the right quality to eliminate malnu- trition while making the supply chain more sustainable needs investment and lots of it. The International Food Policy Research Institute puts the annual funding gap at the best part of $350bn (£282.5bn) a year until 2030, making the $20bn (£16.1bn) invested annually in tackling climate change in agriculture, forestry and land use nowhere near sufficient. But, it seems, investors are interested. Williams is seeing a desire by the stewards of private capital to solve the problems within the food system. “I have been here for two-and-a-half decades and investor interest in agriculture and the food sys- tem is growing dramatically,” he adds.
This growth is evident in food production systems that are designed to halt the negative impact on the environment, such as controlled agriculture through indoor grow spaces. “We are seeing a lot of investment going into that space as a way to bring primary production closer to large population cen- tres,” Williams says. The benefits here are two-fold in that more food is being grown using fewer resources and is trave- ling fewer miles to the consumer.
Aside from ventures developing innovative production sys- tems or new products, there is the option of supporting more traditional businesses in the industry become more efficient in areas such as production, packaging, processing and storage. “There is a broad investable universe here,” Williams says.
Evolving tastes However, when it comes to building a sustainable food chain, we believe the “real opportunity is on emissions”, Williams says. Producing food generates 37% of the harmful gases that damage our climate and sends average temperatures higher. “The food industry’s supply chain is one of the biggest contrib-
30 | portfolio institutional | February 2023 | Issue 120
utors to climate change, as how we produce, process, store and distribute food is energy consuming,” Williams says. “We are working on decarbonising the system.”
This is a sign that the food system is going through a signifi- cant evolution, says Williams. “We are in a different phase of the agricultural system. It is about finding ways for the food value chain to produce more with less inputs,” he adds. This means new methods of production, new products, data systems and platforms to connect to consumers. Creating alternative meat products is an area of innovation where the food chain is attempting to be more sustainable, as meat and dairy are the main culprits when it comes to harmful emissions. There is a growing number of products using plant-based sub- stitutes to mimic, for example, the profile of beef. One of these products big selling points is that they look like a burger, taste like a burger, has the texture of burger, but it does not contain meat. Does this make it a nutritious alternative? With the level of processing involved to re-create the profile of a beef burger, people may think otherwise.
Other innovations that could solve the problems of the food chain include reducing the reliance on synthetic fertiliser, especially nitrogen. Legumes are playing a significant role here in improving soil health. They are one such ingredient that can be used for purposes that have not been a focus in the past. Using legumes in this way can lead to different outcomes on the ground, which are more sustainable and better for soil health and for overall biodiversity. This last point is important. Food production is also, the UN says, the main culprit in causing damage to the ecosystem, which feeds us, gives us medicines, purifies the air, fights cli-
The food system doesn’t deliver well on a quarterly basis, but patient capital has been well rewarded over the long run.
Oliver Williams, Manulife Investment Management
Page 1 |
Page 2 |
Page 3 |
Page 4 |
Page 5 |
Page 6 |
Page 7 |
Page 8 |
Page 9 |
Page 10 |
Page 11 |
Page 12 |
Page 13 |
Page 14 |
Page 15 |
Page 16 |
Page 17 |
Page 18 |
Page 19 |
Page 20 |
Page 21 |
Page 22 |
Page 23 |
Page 24 |
Page 25 |
Page 26 |
Page 27 |
Page 28 |
Page 29 |
Page 30 |
Page 31 |
Page 32 |
Page 33 |
Page 34 |
Page 35 |
Page 36 |
Page 37 |
Page 38 |
Page 39 |
Page 40 |
Page 41 |
Page 42 |
Page 43 |
Page 44
