Like the clean energy revolution, the private sector must invest in a rapid, fair and green transition of today's unviable global food system
The $8-trillion global food system would be insolvent if it was a business or country where the polluter pays. Its annual economic value would be overwhelmed by the costs of its negative impacts, estimated by the World Bank to be $12 trillion annually.
Today's global food system delivers industrial-scale cheap food to billions. Yet it is caught in a vicious spiral that threatens food security, livelihoods and our environment.
It is a major contributor to climate change, as well as being increasingly battered by our changing climate. It draws on nature to produce cheap food, but in doing so, undermines the biodiversity required to produce our food.
It is the source of livelihoods for hundreds of millions of people, but offers, in the main, low-quality, low-paid jobs. And while delivering cheap food stacked high, it fails in its ultimate purpose of delivering affordable nutrition to all.
Love it or hate it, today's food system is fundamentally unviable. Like the clean energy revolution, we need to ensure a rapid, fair and sustainable transition of the food system to one that is climate-, nature- and people-friendly.
Yet the food system transition is even more complex than that facing the energy sector, and riskier by an order of magnitude. Perhaps not surprising, then, that there are so many counter-productive public disputes - such as arguments over the role of regenerative farming or alternative proteins - in the lead-up to the UN Food Systems Summit later this month.
The finance sector must step up
By far the biggest dispute is about the role of private capital, the focus of F4B's most recent report, 'Making Finance Work for Food: Financing the Transition to a Sustainable Food System'.
There is little doubt that the food system is increasingly financialised - that is, being shaped by the logic of risk-adjusted financial returns.
Just 10 companies own half of the world's seed market; four agribusiness companies control 90% of the global grain trade; and 65% of farmland is owned by 1% of farming businesses. Agribusiness is the second-most profitable sector in the United States, made possible by leaving others to pay for environmental and health costs, and by receiving considerable government subsidies.
The sustainable finance community must face the fact that financialisation can be a major driver of the food system's negative impacts and unpaid-for costs.
Much of today's core, commercial food system is at least complicit in reinforcing the unequal distribution of economic benefits, delivering an under-supply of healthy, affordable food, and an over-supply of salt, sugar, fat and carbohydrates.
It also supports lobbying that externalises public health costs, maintains perverse agricultural subsidies, and ensures that nature and climate costs do not diminish financial bottom lines.
Set against this tough view, we can say with absolute certainty that private capital is needed at scale to invest in the food system we need.
F4B's report, prepared with the Food System Economics Commission, is an attempt to get beyond two false views about finance: one that we can do without private capital in transitioning to the food system we need, and the second that we have to accept private capital on any terms.
An agenda for financing more sustainable food systems
We can learn from the clean energy revolution, where global finance is helping deliver a low-carbon future, through improved risk pricing and financial regulation, shifts in central bank behaviour, extraordinary financial innovation, and increasingly through shareholder and citizen action.
Drawing on this experience, F4B's report highlights four clusters of possible actions to positively harness investment:
1. Financial policies and regulation must drive the inclusion of nature and climate impacts into financing decisions, stranding dirty assets and accelerating green-friendly investments.
2. Financial innovation needs to accelerate investments in, and drive down costs of, healthy food produced by climate- and nature-friendly forms of farming. We need an equivalent to the feed-in tariffs that successfully catalysed renewables.
3. Policy and public finance are needed most of all to protect and retool those whose rural livelihoods, food security and economic strengths are eroded during the transition.
4. We need to support citizens' action - as the ultimate owners of the world's financial assets - in demanding their money be used to deliver the food system they need, harnessing digital opportunities to empower and nudge them, as consumers of food, savers, pension policy holders and voting tax-payers.
Now is the time to apply more broadly what we have learnt in reshaping our global food system to ensure a rapid, fair and sustainable transition.
Any views expressed in this opinion piece are those of the author and not of Thomson Reuters Foundation.
Dr Simon Zadek is chair of the Finance for Biodiversity (F4B) Initiative.