Three Facts
This year, 830 million people will go hungry.
We waste 40% of food globally.
Pension Funds can help.
After steadily declining for a decade, world hunger is on the rise, affecting nearly 10% of people globally. Of the 830 million going hungry, 50 million are facing absolute famine. This set-back is driven largely by conflict, climate change, and Covid. 45% of child deaths every year are driven by hunger. These figures compiled by Concern make for grim reading. The sad thing is that after 10 years of making progress, in the last three years the numbers are moving up again – by about 150 million in last three years. We are failing and falling far short on what is required. Only 7% of appeals for urgent hunger-related funding through the UN humanitarian system are filled.
Hunger has a woman’s face. Gender bias is clearly visible in the numbers. Two thirds of all those impacted by food insecurity are women.
Not only are we moving backward in trying to tackle this, but climate change foreshadows a future with even deadlier, more frequent humanitarian emergencies than we know today.
It’s a grotesque number — 40% of global food production is being wasted.
That’s about 2.5 billion tons of food produce that goes uneaten annually. This data emerges in this year’s Capgemini Research Institute’s report. The financial cost of food waste is estimated at $1 trillion.
Where does it happen? Food waste occurs across the food chain.
Almost 1.2 billion tons of food is lost on farms during pre-and-post-harvest/slaughter operations. Nearly 930 million tons of food is wasted in retail and final consumption levels, with the bulk of that occurring at the consumer end.
While it’s a depressing number, the good news is everyone wants to change.
We know this. 72% of consumers have become more aware of this wastage post-pandemic, compared to 33% before. On line searches on “shelf life” are up 80%! Consumers feel guilty and want something done. Today, 61% of consumers feel brands, stores, and supermarkets should do more to help reduce waste. Producers share the view but have a way to go to match consumer demands. The survey suggests only 28% of food producers and retailers are focussing on waste reduction today.
This points to opportunity and increased benefits for all.
How would producers and retailers benefit? There are clear bottom line benefits – the costs associated with food waste account for 5.6% of total sales. And an organisation aware of food waster should also grow that revenue. 91% of consumers say they would prefer to purchase food from organisations that are taking steps to curb food waster. So for the organisation with deliverable plans on food waste it mean higher revenues and profitability.
OK so where do Pension funds come in? We know environmental, social and issues around governance (ESG) are now front of mind for pension funds and investment funds generally. European regulations mean that pension scheme trustees must at least consider such issues in arriving at decisions. Retail investment funds also must now be clearly classified in terms of environmental impact. So it’s on the agenda – but is it working?
In terms of food production many pension funds are looking at (and investing in) new approaches to agriculture which can deliver both improved outcomes and better environmental impact. The aim of this “regenerative agriculture” is to protect soil, make it more resilient and productive, and act as a storage sink for carbons. This seems much like a “win – win” proposition, but today only 15% of the world’s cropland is cultivated along these principles.
A Dutch pension fund is working with local agencies to restore 16,000 hectares of degraded land just north of Sydney Australia to build bio-diversity and critically increase its value. This is being repeated in many other locations, although often has to navigate local political issues. This type of investment by Pension funds is, by itself, not going to feed the world, but is an important building block.
Of course not all pension funds can act as directly as the above but through active engagement and clearly outlined ESG principles they can change corporate behaviour.
Not all ESG factors are created equally.
Arguably some have greater and more timely impact than others.
If we take food waste, where consumers want action, firms want action and the outcomes can be both beneficial and profitable, it would appear to be very powerful as a lever. It is a priority area – the United Nation’s Sustainable Development Goals (which many pensions associate with) have at number 2 – Zero Hunger. Rather than a broad brush approach over an array of ESG factors, a dynamic, targeted and smart approach to this factor might be able to achieve results quicker.
There is no ambiguity in terms of its importance.
Tradewinds 