The role of the private sector in fixing the broken food system
Like many of the systems which supply us with products and services and producers with jobs, security and income, the food system is extremely complex. There are many actors across the value chain from smallholder farmers tending land of less than two hectares through buyers, traders and distributers, to the shops and stores from which we buy. That’s not to mention governments, financial institutions, researchers, technologists and the many more individuals and groups involved. Everyone has a role to play in driving sustainable development– but it’s time for the private sector to take a leadership role.
Despite its complexities, the food system is effectively controlled by a small pool of companies. Large-scale farms constitute 1% of farmers, but control 65% of agricultural land. Five companies process and trade almost all the palm oil in the world, with one (Wilmar) accounting for 45% of the trade. A handful control 90% of the grain traded globally, and ten companies control a large portion of food processing. Six companies provide the majority of seeds, fertilizers and pesticides and Wal-Mart, which feeds one in five American shoppers, is the 10th largest economic entity in the world, including countries.
Companies are beginning to realize that poverty, inequality, water scarcity, climate change and the degradation of natural resources and services are not just humanitarian and environmental issues, but are ultimately bad for business. Investing in sustainable development globally can unlock new markets and opportunities, securing a company’s long-term future. They need to decouple economic growth from irrational resource use and environmental degradation — not just for humanity’s survival, but also as an opportunity to operate in a way that is compatible with limited planetary resources, supports innovation and enables sustainable development.
Although a UN report released in April 2017 found that 82 out of 100 blue chip companies demonstrated commitment to the SDGs in their 2016 annual reports, studies are finding a lack of tangible action: the UN Global Compact has found one third of its signatories have not yet developed any measurable SDG targets, while 60 percent of companies assessed by PwC were not engaging meaningfully. As with other stakeholders, it is time for companies to move beyond making commitments and start taking practical and tangible action — with urgency and ambition. It is important that the push for action comes not only from the company’s Corporate Social Responsibility department or board of directors, but also from shareholders. There is a world beyond profit that needs to be nurtured now for businesses to thrive in tbe long run.
There are several companies taking progressive steps forward and implementing solutions on the ground. AnheuserBuschInBev, the world’s largest brewer has a strong reliance on agricultural products given beer relies on just four ingredients (barley, yeast, water and hops). It is thus working to create thriving farmer communities, to increase resilience to climate change and improve crop quality. The company supplies resilient strains of seeds, education and agronomic advice , scalable technology and improved data analytics. This helps farmers manage their crops more effectively, reduce losses of soil quality and carbon stores, and reduces pressure on land and water.
Many hotels, including properties run by Hilton, Hyatt, Sofitel and Marriott International, are working to cut food waste in hospitality. Approximately one third of all food produced is never eaten, creating unnecessary strains on land, water and wildlife, while food loss and waste represents 8% of all emissions. Simply by starting to separate and measure the food being thrown away, these hotels have been able to identify what they are wasting and why. Consumer-facing solutions in the buffet and redesigned menus help reduce waste, but the real impact comes in buying less food and thereby reducing production demands — as well as purchase costs, increasing revenue from new menu items developed from leftovers or foods previously considered “scraps,” and lowering waste management costs. Proving that profitability and sustainability are not mutually exclusive, a study commissioned by Champions 12.3 showed that for every $1 invested in reducing food waste, hotels enjoyed $7 savings in operating costs.
RaboBank has collaborated with the United Nations Environment Programme to establish a billion dollar fund dedicated to forest protection and sustainable agriculture. It works with clients to fund solutions that won’t get financed through traditional banking — the bank has noted sustainability is now a major element of a risk portfolio and is invested in proving that sustainable business models work. One company which has shifted its entire operations to a sustainability mindset is Unilever which has moved beyond fiscal reporting to annual Sustainable Living reporting. Evidence of Unilever’s commitment can be seen in the transparency around its palm oil sourcing, which reveals all the mills from which it sources.
It is time for these actions to stop being seen as unique success stories. They need to become the norm. In many instances, companies’ sustainability efforts are tied to operational efficiency, but we need to move beyond that, into an era of innovation. The private sector has a responsibility to its shareholders to develop sustainably, as it’s the only way they can grow their revenue in the long-term. Moreover, we hope the private sector is beginning to see its own responsibilities as shareholders in our most valuable resource — our planet. They have a major say in how it fares in the long-term. It’s time to fix the broken systems for everyone’s benefit.
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By Kavita Prakash-Mani, Global Leader of WWF’s Markets Programme, and Joao Campari, Global Leader of WWF’s Food Programme