Climate change is the most influential risk to food and agriculture, according to a new report by the World Business Council for Sustainable Development (WBCSD) and KPMG.
“We cannot overstate the siren call,” it says, adding, climate change implications must guide every decision across the global food system.
“Every business, government body and consumer must build the consequences of climate change into every investment and purchase decision,” it says.
The report also says companies should reduce the risks of uneconomical farming, poor food quality and affordability, social inequalities and diminishing biodiversity.
Across the risk clusters the report found that uneconomical farming is the most connected to every other risk. It says, “These inbound paths are like a plant’s root system and this risk has the most integrated root system of any risk.”
It says agrifood value chains are not seeing a fair distribution of profits, with growing income disparities exacerbating rural poverty.
“Incentivise consumers to be agents of change”
Proposing ESG risk guidance, the report says, “consistent, mandatory labelling of environmental impact is one of the most impactful actions the industry could take.”
This is critical so that “consumers, regulators and businesses can make informed decisions and change their behaviours.”
The cluster made up of climate change, diminishing biodiversity, disconnect between long and short-term interests, and soil degradation, created the most severe risk to agrifood.
It’s the risk cluster most likely to be experienced, and once that risk arises, its time to impact is estimated at 44 months – just over three and a half years. “We cannot allow one risk to spread to another, and it follows that we must address and mitigate each risk within the cluster with purpose and urgency,” the reports says.
It follows the UN Food System Summit’s Business Declaration on Food Systems Transformation, which proposed “incentivising consumers to be agents of change, creating demand for sustainably produced goods.”
“Profit optimisation cannot be the sole objective of financial institutions”
It quotes Peter Bakker, President & CEO of WBCSD, who said at the UN Food Systems Summit, “Business understands it will, and it must, be held accountable for its impacts…Transparency through ESG disclosures and the development of a system wide approach to the true value of food will be the way forward.”
It challenges decision-making architecture that supports short-term returns at the expense of longer-term benefits, such as corporate reporting cycles that don’t include the costs of climate change.
It says soil degradation must be mitigated and nutrients preserved, adding, “We can reward farmers who put carbon back into the soil and those adopting sustainable practices.”
It also says that information on water footprints would help reduce the risk of water scarcity.
“We sorely need financial innovation,” says the report. “The global financial crisis demonstrated beyond question that profit optimisation cannot be the sole objective of financial institutions.”