Financial institutions could cut global emissions by 20%, and the food system’s footprint by 60%

INSIGHT by Planet Tracker

〉Planet Tracker issues largest combined analysis of its kind based on company activity and pinpoints exactly how and where investor action should be targeted for urgent food system transformation before 2030.

〉USD 8.6 trillion private finance is funding current unsustainable global food system, responsible for approximately a third (34%) of global emissions.

〉Planet Tracker’s six steps for financial institutions would cut global emissions by 20%, and the food system’s footprint by 60% – saving 10 gigatonnes of CO₂e, equivalent to double US’ current emissions.

〉An estimated economic benefit of over USD 1.5 trillion.

〉Individual food firms set to lose 26% of their value by 2030.

Today, financial think tank Planet Tracker launches a new ground-breaking Roadmap for Financial Institutions (FIs), as it calls for the urgent transformation of global food systems, which could cut global emissions by 20% and deliver over USD 1.5 trillion in economic benefits.

Planet Tracker’s new report Financial Markets Roadmap for Transforming the Global Food System captures data from 400,000 companies across 160 countries covering the whole food system including seafood and including food giants such as Nestlé, McDonalds and Walmart – the largest combined analysis of its kind. The estimated annual global investment to achieve world-altering results is just USD 300-350 billion – equivalent to 4% of the USD 8.6 trillion of current investment.

Planet Tracker’s Roadmap provides a ‘Four Transformation Themes’ strategic framework for FIs to guide their capital allocation and engagement with food companies and outlines six priority actions that if implemented would wipe out approximately ten gigatonnes of CO₂e – equivalent to double current US annual emissions – by 2030.

This would reduce the current global food system footprint, 17.9 GtCO₂e, by 60% and humanity’s overall greenhouse gas emissions by a fifth.

The Roadmap focuses on the role of private financial flows into the food system and is designed to help investors focus their strategic allocation, engagement and stewardship activity. It includes a detailed analysis of the harms arising from the current food system and the disastrous trajectory it will take if a business-as-usual approach continues to be funded by private finance.

Crucially, the Roadmap includes coherent, tangible actions for FIs to do themselves, and what they should require of their investments.

Peter Elwin, Director of Fixed Income & Head of Food and Land Use programme at Planet Tracker, said: “The global food system generates nearly 20% of the world’s GDP, however it is inherently fragile and no longer fit for purpose. From conception in the farm to consumption on the fork, the global food system accounts for a third of greenhouse gas emissions and endangers 86% of species on the IUCN Red List. Even as food reaches the end of the chain, one third is lost or wasted.

“From conception in the farm to consumption on the fork, the global food system accounts for a third of greenhouse gas emissions and endangers 86% of species on the IUCN Red List. Even as food reaches the end of the chain, one third is lost or wasted.”

–Peter Elwin, Planet Tracker

“Unless the global food system is transformed, none of the global targets, pledges and ambitions that have been agreed in recent years with respect to people, planet and climate will be achieved. Financial institutions providing debt and equity finance have an outsize opportunity to influence systemic change.

“From halving food waste to stopping deforestation, six steps by investors could take 60% of food’s emissions off the table”.

“Unless the global food system is transformed, none of the global targets, pledges and ambitions that have been agreed in recent years with respect to people, planet and climate will be achieved.”

–Peter Elwin, Planet Tracker

The priority actions sit within a framework of four transformation themes, which help financial institutions to configure investment and engagement processes to ensure capital allocation in support of transformation and mitigate future associated risks. Along with responsible supply chains, other themes encourage increasing food system (true cost) efficiency, developing sustainable product offerings and reducing food system pollution.

The comprehensive bottom-up analysis of the relationship between finance and the food systems’ planetary footprint emphasises that while many of the harms in the food system occur at food production level, the demand that drives them is generated further downstream at the retail and service end of the supply chain, where finance tends to focus. These actors and their funders therefore have a critical role in reducing systemic harms, with responsible supply chains an integral part of the framework.

| Six Priority Actions for 2030

Given the many issues intrinsic to global food systems and the major role private finance has to play in supporting and driving transformation, Planet Tracker provides six tangible priority actions for financial institutions to significantly reduce the harms generated by the current food system.

The report includes coherent, tangible actions on what FIs should do themselves, and what they should require of their investments.

Before 2030, Planet Tracker calls on financial institutions to:

1. Require fully traceable supply chains: with a particular responsibility for investors and banks funding companies towards the downstream end of the supply chain (manufacturers, retailers and service companies)
2. Halve food loss and waste: by engaging with companies to reduce losses through the production process and waste at the retail and consumer end while maximising efforts to reuse food that is not fit for consumption for other purposes
3. Stop funding deforestation: by implementing policies including publicly committing to ensuring zero deforestation risk in portfolios and targeting deforestation-linked emissions in net zero plans
4. Cut agri-methane emissions by 45%: through allocating capital away from industrial animal protein production towards alternative protein producers, increasing disclosure around methane emissions and engaging with investees to ensure producers are aligned with the Global Methane Pledge
5. Encourage regenerative agricultural systems: through activities such as engaging investee companies to adopt regenerative techniques and establishing strong due diligence processes to ensure regenerative practices are genuine
6. Invest in alternative proteins: by engaging with governments to ensure regulatory frameworks encourage the development of alternative proteins and with investee companies to set time-framed targets for shifting away from industrial meat and dairy

If financial markets fail to follow these steps and address the harms caused by the global food system, they face significant risks to their investment portfolios, with individual food firms standing to lose 26% of their value¹.

On the other hand, the report illustrates the economic benefit from the priority actions, which in total is calculated at USD 1.5 trillion, and that the annual investment to achieve these results is USD 300-350 billion – equivalent to just 4% of the USD 8.6 trillion of current investment.

The report illustrates the economic benefit from the priority actions, which in total is calculated at USD 1.5 trillion, and that the annual investment to achieve these results is USD 300-350 billion – equivalent to just 4% of the USD 8.6 trillion of current investment.

The Executive Summary can be downloaded in here. Financial institutions should refer to the six Priority Actions, which explain what needs to be done and the benefits for humanity, and financial markets, in doing so.

The Roadmap is designed to be the start of the food system journey, and Planet Tracker will continue to provide detailed analysis and toolkits for financial institutions to implement the priority actions.

¹Data leveraged from Race to Zero 2022 report

| about

Planet Tracker is a non-profit financial think tank producing analytics and reports to align capital markets with planetary boundaries. Our mission is to create significant and irreversible transformation of global financial activities by 2030. By informing, enabling and mobilising the transformative power of capital markets we aim to deliver a financial system that is fully aligned with a net-zero, nature-positive economy. Planet Tracker proactively engages with financial institutions to drive change in their investment strategies. We ensure they know exactly what risk is built into their investments and identify opportunities from funding the systems transformations we advocate.

Food system transformation programme. The goal of the programme is to align capital markets with a sustainable global food system. Before 2050, Planet Tracker’s Food and Land Use Programme will highlight the investment risks and opportunities associated with the just and equitable transformation of the global food system that eliminates negative externalities with respect to climate, nature, and health so that it is fit to feed the world’s growing population within planetary boundaries. By highlighting these risks and opportunities, Planet Tracker’s Food and Land Use programme will influence financial markets actors to actively support and fund this transformation.

| All opinions expressed are those of the author and/or quoted sources. investESG.eu is an independent and neutral platform dedicated to generating debate around ESG investing topics.