In terms of food security, businesses are really feeling the impact of issues like climate change.
One of the macro trends in our 10 Years of 10 Trends report is Food as the New Eco Issue—the idea that consumers are coming to better understand how their food choices affect the environment. We talked to Mark Driscoll, head of food at Forum for the Future, about what’s driving this change, which companies are doing it right and the future of the sustainable food movement.
What are the main economic drivers behind efforts to build a more sustainable food system?
The big macro picture is tied to the burgeoning global population, which is expected to reach 9 billion by 2050. The other key dynamic there is the burgeoning global middle class. Soon we will have an extra 2 to 3 billion people in the middle class predominantly from China and Southeast Asia. This population will have more resource-intensive diets, consuming more meats, dairy, and processed foods. This puts more pressure on land. There are going to be significant resource constraints in the future with increasing competition on land for food, energy, and fibers. The key question is, “How can we increase food production to feed that burgeoning population with their changing diets?”
Aside from land resource constraints, we’re also hitting a crunch when it comes to key agriculture inputs such as phosphates, nitrates, potash and other nutrients. The price of energy, like oil, is key for our agricultural systems. There are many stats saying we need to increase food production by 70-100% by 2050. I would challenge that and say that’s a business as usual approach.
The holistic macro picture is as follows: despite increasing productivity, we still have 820 million people suffering from hunger. We also have another billion people suffering from obesity. The big picture in food is addressing the link between sustainability, health, nutrition and food security. This will be one of the key challenges of the 21st century.
From your point of view, are key stakeholders addressing the issue of food security differently now than they did in the recent past?
The food price hikes of 2008, as well as the volatility of key ingredients and commodities, have really hit home the importance of food security for food businesses and governments.
Over the last three to five years I believe there’s been a change in the way businesses think. Businesses still define food security in many different ways. They see it both as a risk—in terms of increasing volatility of key inputs and ingredients—as well as an opportunity. From a food security perspective, there’s huge opportunity to link sustainability with the nutrition and health agenda. Many consumers are driven by health choices above and beyond sustainability choices, but there is an opportunity to frame healthy sustainable diets as a way of maximizing nutritional outcomes.
In terms of food security businesses are really feeling the impact of issues like climate change. We’ve felt the impact of drought on food production in California. We’re also feeling the devastating impact of increasing temperatures and humidity in Central and South America on coffee production, which has forced prices up.
There are retailers like ASDA in the U.K., who are doing research and saying that 95% of their fresh produce is at risk from climate change and water scarcity. For the fresh produce sector it’s challenging, particularly for products that are grown in Africa and Southeast Asia, which are at significant risk. Much of the innovation through the green revolution is reaching a plateau. Over the next three or four decades we could see a decline more generally in crop yields of -2% to -3%. For items like meat, which is a high-impact food, the challenge will become livestock feed. As feed prices increase, it is likely meat will become much more expensive, plus there will be competition for grain feed to feed animals raised for meat and grain feed to feed humans. Those are the issues that are driving business decisions at the moment.
There’s a lot happening right now with companies creating insect-infused products, as well as farmers raising insects for livestock feed. What’s your take on all this?
Insect eating has a large claim—you know two billion people already eat bugs in East Asia. I don’t think eating insects is going to become mainstream in the developed world, but I do see the potential for growth in insect-based protein to feed livestock. There’s some interesting work being done down in Germany and parts of Europe on this topic.
Sustainability is a term that’s thrown around pretty loosely these days. How would you define sustainability in relation to food and the environment?
That’s a challenging question because sustainability means different things to different organizations. Sustainability to me should focus around social, environmental and economic pillars. When it comes to our food systems and the environment, we have to move on from the concept of sustainability as a word associated with increasing food production by reducing the impact on the environment. Instead, we should define sustainability in terms of increasing food production while restoring the ecosystems on which our very food system is based.
The economic side is around creating shared value. At the Forum we talk about the need to move from sustainable value chains to sustainable value networks in which value is equitably shared from a financial perspective as well as social and environmental perspectives. It’s about improving livelihood outcomes, insuring farmers have a living wage that they can invest back into sustainable agriculture. With the social dimension there are skills development, exchange of knowledge and other wider community benefits.
Which food corporations are doing it right in terms of walking the walk and truly addressing the environmental impact of their organization?
It’s quite a challenge and I don’t think any business is there quite yet. The likes of Unilever are often referred to as leading around sustainable agriculture. They have their Sustainable Living Plan, where they’re working to half their environmental impact while doubling the size of their business. But even with that example there’s a long way to go. There’s the need for more businesses to take a competitive collaborative approach to addressing some of these shared challenges.
I can give lots of examples of individual businesses doing great work on single-issue areas. PepsiCo for example is doing great work around sustainable agriculture. They’re working with their suppliers and farmers in establishing farmer groups. These groups are sharing best practices so they’re codified. They’re looking at water and how they’re going to address water as a shared risk. Other companies are focused on biodiversity elements depending on their material issues.
The sustainable agriculture efforts seem like very smart projects for multinationals to get involved in.
Yes, exactly. Primarily because this is about building resilience in their supply chain. From their vantage point, they can see the key mix with climate change taking effect. They can see the changes in civil society as well as the role of digital technology in allowing greater transparency. Companies have to understand where their products come from and be honest. There still are a large number of organizations and food companies out there that don’t even know where their basic ingredients come from. Smart businesses are working with farmers and suppliers through intermediaries to set standards. They are providing small holder farmers with finances to help them reduce food waste. All those issues businesses will increasingly look at because there could be a significant brand and reputational risk if they don’t.
Are there any other big players involved in sustainable agriculture?
Walmart has instituted a new kind of sustainability strategy. A lot of retailers that are two or three steps away from producers increasingly recognize they have a responsibility here. The likes of Nestle are doing some interesting work on sustainable agriculture. SAB Miller is doing some interesting work through the Waters Future Partnership. Diageo is doing some interesting work in East Africa supporting their farmers and developing more direct relationships. Organizations like McDonald’s, actually, which has been seen quite negatively in the past, has done some amazing work supporting their producers. They’re building direct relationships through the global roundtable of sustainable beef and they work with the likes of WWF.
The other big work we’re involved in is around land and taking more of a spatial approach to land and land management. We’re looking at the potential of creating a global leadership platform to address the challenge of land and land management but more from a governance perspective. Rather than focusing on a farm by farm level, organizations are recognizing that what happens on one farm can have displacement impacts that will effect the wider community. The question then becomes how can you manage land within a particular region or watershed in a way that addresses better land use, governance of land use and decisions that don’t have negative impacts?
So, its not just McDonald’s and PepsiCo working together. It’s people from different backgrounds coming together and using different expertise to actually make something happen.
Yes, that way you can have horizontal collaboration across value chains and value networks. What we need is government, civil society, organizations and producers to come together to address some of these challenges.
We’re working with key industry leaders pulling together 40 or 50 producers, retailers and manufacturers to create a shared vision for sustainable industry. But more importantly we’re now focusing on cross-collaboration platforms to address some shared challenges and work through them together.
Do you think your everyday consumer is currently considering the environment when they’re making their dietary choices?
No. I think a small proportion are. When it comes to consumer choices, 70%, 80% of consumers in the U.K. and Europe are concerned about sustainability and environmental impact. That tends to revolve around fair trade, organic and local more than anything else. When it comes actually to putting the shopping in the basket, most people still make decisions based on cost, quality and taste. Environmental considerations come way down that list.
There is an expectation that the food industry and retailers will insure that most of their products are sustainably sourced. There’s an expectation from consumers that those choices are made for them. There have been a lot of good debates around the role of labeling. While that may help, I think there are other more important mechanisms that are required. This is where issues of choice, editing and the need for a retailer only to provide sustainable products comes into play. In this scenario there’s still a range of choice, but the sustainability and environmental decisions are taken away from the consumer.
Do you think there are any corporations that are doing a good job of educating consumers about the need to start considering the environment when they make their food purchases?
Sainsbury in the U.K. is doing a lot in terms of consumer awareness campaigns. Food waste is being addressed by a number of retailers. Tesco is doing a lot more engagement. There’s an organization called WRAP running a campaign called “Love food, hate waste,” and there are a number of retailers and food manufacturers who have signed up for that. We work with Marks & Spencer and other food retailers. They’re taking a more proactive approach and engaging consumers through in-store promotions and other awareness activities. A number of organizations are putting together recipes with suggestions for how to use leftover food or cupboard storage advice in the home to keep food fresh. There’s a lot that can be done to influence and shape consumer behaviors above and beyond labeling.
Have you noticed any generational differences in terms of consumer interest on this topic?
Younger generations from both the developed and developing world are much more concerned about environmental issues. There is an expectation that brands will address sustainability challenges and step up to the mark. I think focusing on younger consumers with the power and influence of digital technology is a powerful tool too.
Geographically is this an issue that’s more prominent in certain regions than others?
In developing markets in particular, there is an expectation that key food brands should be creating positive societal benefits. There’s an increasing expectation that brands need to produce goods and services that lead to wider societal benefits.
This issue is taking hold in China, Southeast Asia and parts of Africa where the growth of the middle class is happening. In a way certainly the younger generation has been impacted by air and water pollution within cities. I think that’s going to shape and drive a lot of business behavior in the future in these regions.
What are some of the biggest challenges to getting consumers on board with rethinking their eating habits in order to become more sustainable?
It is around this health and nutrition perspective, the idea that what’s good for your health and your family is usually good for the health of the planet. Think about how you frame and communicate some of those challenges. In my opinion it is a matter of reframing some of the negatives. So we know what a lot of the challenges are. We know about climate change, water shortages, biodiversity loss and so on, but it’s about telling some of the positive new stories. It’s about exploring the benefits for citizens, society and how it can improve your health and well being.
It’s also about how, in an increasingly urbanized, global world we’ve become disconnected from how we grow and produce foods. There are real opportunities for businesses that can reconnect citizens with the production, preparation and cooking of our food.
Additionally, you can’t look at this without looking at the role of government. How will governments deal with water scarcity? Are they likely to put a charge on water for farmers? You’re already seeing that in parts of India and Southeast Asia with governments putting water charges on agriculture above and beyond a certain extraction threshold.
It’s quite multifaceted in terms of changing consumer behavior. It requires government, businesses and others to drive that kind of change.
How do you think the issue of building a sustainable food system will evolve in the next three to five years?
This whole issue of food sustainability and food security has to become front and center of many food businesses. As they feel the effects of climate change and water scarcity, as a medium- to long-term threat to their ultimate business and business model we’ll increasingly see it.
Number one, they’ll look at linking transparency and traceability, ensuring they know where and how their food is produced. Number two, they will move toward working more with their suppliers to address some of those shared challenges in the food system.
Lastly, they’ll be concerned around security of supply as climate change takes effect with increasing disruptions. So they will want to look at new products, services and new ways of producing food.