Introducing metrics for assessing the food industry as it moves towards delivering sustainable and healthy diets would be in investors’ interests, writes Will Nicholson, project lead at Plating up Progress.
Plating Up Progress set out to answer two fundamental questions: what are the metrics that food businesses should be using to evidence a transition to healthy and sustainable food, and do they matter to external stakeholders such as investors? In other words, are the food system challenges that relate to climate change, biodiversity, nutrition, water use, and ethical issues important (or material) for investors, as well as being of more obvious significance to society as a whole? And if so, how can we track improvements?
We need to understand the risks to investors who have assets under management in the food industry, and what investors stand to gain by tackling these problems. We know that acting on these issues means shifting our (Western) diets towards more healthy and plant-rich foods, and to more sustainable production systems. As such, Plating Up Progress focuses on food retailers, caterers and restaurant chains: they are the gatekeepers to the food we eat, and the channel through which most commercially produced food is funnelled.
Workshops and scenario analysis with investors highlighted that the finance sector did indeed see food as being a key industry in addressing societal or global issues such as climate change, biodiversity loss and human health, and that more specific risks and opportunities existed for food businesses under a transition to a sustainable future. These transitional risks and opportunities include policy interventions, shifting consumer demands, reputational risks and physical risks around supply volatility in a changing world. Future-fit businesses will thrive: those with business models rooted in the current system stand to lose over time.
It is in investors’ interests to see businesses setting and meeting targets around sustainable supply chains (primarily around palm oil, fish, soya, animal welfare, and exposure to water scarcity risk). They should also be encouraging a more fundamental shift that decouples business performance from revenue dependency on unhealthy and environmentally damaging foods. It’s in the latter that we see the biggest gaps in current corporate targets. Very few retailers, caterers or restaurants are publicly setting concrete targets for shifting their business models away from animal products and foods high in fat, sugar and salt, and towards sustainable proteins and plant-rich foods. These are high-profile issues, but issues on which there is currently little clarity or consensus on what a proportionate response looks like, making it hard for investors to know whether businesses are part of the solution or the problem.
For comparison, imagine an energy company that has an active public position on the importance of renewable energy, but has declined to set any real targets for transitioning revenues away from fossil fuels and towards clean energy. Under no circumstances would investors consider that a future-fit approach, and we need the same level of attention in the food industry.
Of course, gaps also persist in supply chain targets, especially around soya as a component of animal feed and around mapping supply chain exposure to water scarcity, but these are issues that already have a home for metrics and reporting (for example, CDP Forests and CDP Water). What we need is more focused engagement between investors and businesses on these issues, a standardised way of reporting on targets for shifting business models, and a reframing of the dialogue to include the need for dietary shifts, which means targets for selling more plant-rich and healthier food. In addition, both investors and food businesses must maintain their more traditional attention to supply chains.
For a while now, the research community has called for dietary shifts and sustainable production systems, so we need to translate this into business targets that are integrated into investor engagement with, and analysis of, companies.
This being the case, Plating Up Progress’s next steps will be to host a series of roundtables to build consensus on the metrics that should be used, and to facilitate investor engagement, both with businesses and with the wider framing of the overall policy agenda for accelerating the transition to healthy and sustainable food systems.