NEWSLETTER by Alessia Falsarone. The author acknowledges the team at The University of Chicago Circular Economy and Sustainable Business Management Program and all participants of the innovation knowledge hub for their insights and collaboration.
The celebration of World Food Day marks the establishment of the United Nations Food and Agriculture Organization in 1945. While much has changed since its inception, one fact remains unchanged: estimates of food insecurity continue to rise alongside our global population.
By constructing a circular economy for food, we can acquire a vital instrument in ensuring a nutritious and affordable diet for all.
| The science of impact
What could circularity for the food industry look like? According to the Platform for Accelerating the Circular Economy (PACE), there are three objectives that would make a circular economy model for food impactful:
- Food produced in ways that regenerate nature. We need to change what we grow and how we grow it. Currently, over 75% of our food comes from just 12 plants and five animal species due to the industrialization of agriculture. This poses significant risks to human health and the planet. To address this, we must shift towards a planetary health diet that includes more fruits, vegetables, and diverse protein sources. Additionally, we should adopt more resource-efficient and regenerative methods (from agroforestry, to permaculture, and silvopasture).
- Food not lost or wasted. Food loss and waste have devastating environmental and economic consequences. If food loss and waste were a country, it would have a GDP equivalent to that of the Netherlands and be the third-largest greenhouse gas emitter in the world. To combat this, we must minimize food loss and waste at every stage, including production, handling, storage, processing, packaging, distribution, and consumption. By doing so, we can make significant progress in mitigating climate change.
- Productive use of commonly wasted (food) resources. This objective focuses on repurposing edible food waste, inedible by-products from food processing, and human waste. Currently, less than 2% of the valuable nutrients in these materials are recycled. We can tap into these resources by using them as fertilizers, animal feed, or feedstock for textiles and plastics. This approach not only drives innovation and creates new business opportunities but also reduces environmental damage.
Beyond resource efficiency, it brings tangible benefits to human health and biodiversity by reducing pollution and increasing nutrition. Furthermore, it can generate more job opportunities, improve farm economics, combat climate change through reduced food loss and waste, and create environmental and socioeconomic wins by utilizing commonly wasted resources effectively.
It begs the question:
Where is action most needed for a transition to a circular economy for food?
| Circularity roadmaps explained
The concept of circular food systems is relatively new. While there is no one definition, it is important to focus on making existing food systems sustainable. The Food and Agriculture Organization – FAO tells us that to be sustainable a food system should provide food security and nutrition for all “while also ensuring that future generations can do the same, without compromising economic, social, and environmental resources”. No question, to successfully transition to a circular economy for food, it is crucial for businesses, governments, and civil society to work collaboratively. The Circular Economy Action Agenda, developed by Platform for Accelerating the Circular Economy (PACE), establishes clear objectives and outlines how impact assessments can support a faster and more efficient transition of the food value chain. Specifically, it identifies five areas of impact resulting from a circular food system:
Resource Use; Climate Change; Human Health & Biodiversity; Economic Well-being; Decent Work.
The transition to circular food systems offers both benefits and trade-offs, which need to be addressed throughout the journey.
For instance, the impact on climate change and the establishment of fair working conditions remain uncertain when adopting regenerative farming practices or reducing food waste. Factors such as land use changes and potential job losses on farms may negatively affect GHG reduction efforts or employment conditions. Additionally, regenerative farming may lead to lower crop yields and reduced productivity due to the implementation of regenerative practices. The main barrier to achieving positive impact, in my opinion, lies in the pricing of food not adequately considering the externalities generated by its production and consumption, including environmental impact and nutritional benefits.
| Investing in the Circular Economy
Investments in food circularity have primarily focused on addressing waste and distribution inefficiencies in the food supply chain, with a key emphasis on promoting human health and wellbeing. The team at WWF Impact invests in early-stage innovations that specifically address food waste, food loss, waste-to-feed initiatives, and sustainable food packaging. Their focus lies in promoting business models that effectively recover and revalue food waste, transforming it into a valuable resource that offers profitable environmental and social benefits.
Here are some examples of the opportunities they have pursued:
1. Upcycling opportunities and valorization of byproducts
2. Technologies that naturally extend the shelf life of fresh food items
3. Improved systems for food access, donation, and distribution of surplus food
4. Innovations that minimize farm loss and support efficient harvesting and distribution processes.
The team suggests that investing around US$14 billion annually for 10 years into US food waste solutions could yield a net financial benefit exceeding US$70 billion and significant environmental rewards. These rewards include a reduction of 45 million tons of food waste, cutting 75 million metric tons of GHG emissions, and saving 4 trillion gallons of water. Additionally, this investment could help recover 4 billion meals each year. However, startups focused on circular food solutions have encountered challenges in scaling up due to limited traditional sources of investment capital. The current funding in this space primarily has prioritized consumer trends and opportunities with rapid growth and high profit margins.
Off to another impactful week!
| about
Alessia Falsarone is executive in residence, practitioner faculty at the University of Chicago, where she leads the Circular Economy and Sustainable Business program. The article is based on the author’s newsletter A Week of Circularity from the innovation knowledge hub.
| 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.
