Impact Blog
Talking turkey: Global food insecurity and climate change

The views expressed in these posts are those of the authors and are current only through the date stated. These views are subject to change at any time based upon market or other conditions, and Calvert disclaims any responsibility to update such views. These views may not be relied upon as investment advice and, because investment decisions for Calvert are based on many factors, may not be relied upon as an indication of trading intent on behalf of any Calvert fund. References to individual companies for Engagement or Research purposes are provided for illustrative purposes only and may not be representative of the results of all of Calvert’s engagement efforts. The discussion herein is general in nature and is provided for informational purposes only. There is no guarantee as to its accuracy or completeness. Past performance is no guarantee of future results.

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      By Leah MoehligESG Senior Research Analyst, Calvert Research and Management

      Washington — With Thanksgiving nearly upon us, and many Americans sitting down soon to feast with family and friends, it is a good time to consider environmentally sustainable ways we can work to address global food insecurity.

      Agricultural production accounts for an estimated 25% of total greenhouse gas (GHG) emissions globally, according to World Resources Institute (WRI).1 Moreover, the world's population is on track to increase from 7 billion in 2010 to almost 10 billion by 2050.2 It's clear that food security — the availability, accessibility and allocation of food — will be an ever-greater challenge.

      Globally, we face the task of feeding nearly 3 billion additional people without increasing GHG emissions (a key contributor to climate change), fueling deforestation or exacerbating poverty.

      This presents both challenges and opportunities for companies within the agricultural supply chain, and Calvert believes that companies that proactively address these issues are more likely to effectively manage related operational costs and benefit from emerging growth opportunities.

      Improve land productivity. Extreme and unpredictable weather patterns pose a risk to agricultural-product companies and food manufacturers that rely on raw materials for their products. To help mitigate these risks, companies can take steps to improve land productivity. Working with farmers and suppliers to teach and encourage sustainable farming techniques that promote long-term productivity, implementing sustainable sourcing policies and committing to externally verified certification standards throughout the supply chain are examples of best practices.

      Increase water efficiency. Climate change has contributed to water stress in some agricultural regions, affecting crops and food manufacturers. Water scarcity issues vary by location, therefore it's important for companies to implement a water-risk assessment of each of their sourcing regions. Companies that work to reduce water intensity and improve watershed health will be less likely to experience water-related operational disruptions from shifting weather patterns.

      Reduce food waste. Across the planet, approximately one-third of the food produced each year is wasted at various stages between the farm and fork. According to WRI, "globally, food loss and waste results in nearly $1 trillion in economic losses, contributes to food insecurity in some developing countries, and squanders agricultural land and water resources."3 Although it varies by region, food waste occurs at all points of the supply chain, creating opportunities for companies in many sub-industries. Agricultural producers, packaged-food manufacturers, and food retailers alike can help combat food waste with more efficient farming practices, logistics technology, packaging innovation, labeling initiatives and discounting strategies.

      Food loss and waste primarily occurs closer to the consumer in developed regions — and closer to the farmer in developing regions.

      1120FoodInsecurityblogchart

      Introduce plant-based food products. Production of animal-based products has a much higher negative environmental impact than plant-based products. According to WRI, production of animal-based foods accounts for more than 75% of land use and two-thirds of agricultural GHG emissions, but only 36% of protein calories and 16% of total calories.4By shifting to more plant-based products, food manufacturers may not only reduce their environmental impact but benefit from competitive positioning and growing consumer demand.

      Provide technological solutions. The need for farming efficiency and potential for related cost savings creates opportunities for companies within the agricultural machinery subindustry. Advancements in technology, such as precision agriculture that results in fewer inputs and increased yields, can contribute to farmers' goals to improve sustainability, while potentially contributing to the bottom line. Companies that offer these types of sustainable products or technologies will likely see demand rise for their products.

      Bottom line: The growing global population and associated food demand creates climate- related challenges, which creates risks and opportunities for companies in the agricultural and food-production chain. Calvert evaluates companies on their ability to navigate associated risks and opportunities and contribute to food demand in a sustainable manner.