The circular economy – ESG Feature
food system contributes around a quarter (26%). The situation is made worse by the fact that almost half of all food ends up in the bin. “Approximately 40% of the food we produce goes to waste and we need to tackle that,” Suzuki says. But when it comes to protecting the planet, the conversation about waste should go further than the amount of food we never eat.
It is important to consider the restoration of soil and biodiversity if our farms are to continue producing food, but balancing yields with soil health is challenging.
Hideki Suzuki, Manulife Investment Management
“In the public equity markets, there are some interesting pure plays in terms of the recycle economy, from waste manage- ment to using different material inputs,” Suzuki says. “From a fixed income perspective, there are green bonds and sustainability bonds which speak to these take, make, recycle themes,” he adds. For Suzuki, regulation and consumer demand are playing a role in shaping attitudes here. The EU’s Sustainable Finance Disclosure Regulation (SFDR) has a requirement to look at waste intensity alongside water and energy consumption. Then there is the UN’s global plas- tics treaty, which has been endorsed by 175 countries to end plastic pollution.
This is not just promoting greater disclosure, but to actually manage these issues. “External forces are making us look at these issues,” he says, adding that more work is needed. “The regulator could do more around education on the cycle economy and its impact,” Suzuki says. “We hear that younger generations are thought to be more sustainability conscious, but they still want fast fashion and 24-hour online delivery. There can be a disconnect between the younger generation’s actions and their beliefs. “Governments could be doing a lot more,” he says.
The 26% club
Agriculture is an important part of any conversation on the impact the waste we produce has on our planet. Growing crops harms the environment. Indeed, agriculture accounts for around 10% of human-induced emissions, while the wider
Issue 113 | May 2022 | portfolio institutional | 27
“The environmental impact of the food production system goes beyond greenhouse gas emissions and climate change,” White says. “There is an inter-dependent collection of risks that includes water waste, pollution and biodiversity, so we need to think about it in a holistic way.”
Producing food close to the point of consumption and employ- ing closed-loop systems to recycle water used in these processes are examples of how farmers and companies can limit the environmental damage of food production. “We all need food, it is a huge industry, so incorporating con- cepts of circularity is essential to reduce waste,” White says. Regenerative agriculture is important, Suzuki says, if we want to continue growing food, but this is not easy. “It is important to consider the restoration of soil and biodiversity if our farms are to continue producing food, but balancing yields with soil health is challenging.
“Initiatives that use less water and maximise the crops that are grown are encouraging,” he adds. “Producing less waste is equally critical as regenerative agriculture.” So, waste touches just about every part of our lives and there are several options in how to deal with it. New business mod- els may appear in the coming years to adapt the “take, make, recycle” model as investors cannot achieve carbon neutrality by focusing on oil and gas alone. Who knows? Perhaps loaning customers the box a burger comes in could be the way forward.
It is in a company’s interest to manage its waste, because it is about efficiency.
Rebecca White, Newton Investment Management
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