The profitability of the world’s largest food and agribusiness companies depends on secure access to a reliable supply of commodities, but this secure supply base is increasingly in jeopardy due to climate change, water scarcity, deforestation, and other sustainability issues.
Climate change and growing water scarcity are compromising agricultural productivity and increasing procurement costs. And, illegal and unethical practices such as the razing of rainforests and the use of forced labor are intensifying as global food demand and population pressures mount. This creates new portfolio risks for investors and operational, regulatory and reputational risks for companies. But it also creates new opportunities. Most notably, consumer demand for food that is sustainably sourced is on the rise, creating opportunities for innovation and disruption in our current food system.
To maintain growth and profitability in this new context, large food companies must develop sourcing strategies that fundamentally decouple food production from environmental degradation and human exploitation. This means supporting production practices, industry efforts and government policies that preserve water and forests, accelerate climate-resilience, and protect the fundamental human rights of workers.
With our investor and company members, Ceres is driving large-scale changes in the way food is produced and sourced. We are working with the world’s largest institutional investors to help them better understand how these pressures present risks and opportunities for the food sector.
We work with members of the Ceres Investor Network to increase transparency of these risks from the food sector and improve corporate strategies on key sustainability challenges. We also work directly with food companies in the Ceres Company Network to set new goals that will reduce negative impacts and improve company performance on sustainability challenges from water scarcity and pollution to deforestation and forced labor.
And we are working with companies in the Ceres BICEP Network, including Mars, Unilever, and General Mills to advocate for strong climate policies at the state and federal levels.
In California, company members of Ceres Connect the Drops campaign are making their own commitments to better protect water resources and are advocating for strong policies that will help the state better manage and protect the water supplies it needs to grow much of the food produced in the U.S.
We are also working with global investor groups and a diverse group of nonprofit organizations to improve transparency and help all stakeholders understand the growing deforestation impacts associated with palm oil, cattle and soy supply chains.
The bottom line is climate change, deforestation, water scarcity and pollution and other global sustainability challenges are putting food supply chains at great risk. Achieving sustainable food and agriculture systems must be an imperative for investors, companies and governments around the world.
October 24, 2016
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