COP26’s moment of truth: High time for good food finance to enter the climate action menu

By Olav Kjørven, Senior Director of Strategy, EAT

Two sectors will be decisive for the rapid and successful decarbonisation of our economies: energy and food. Energy gets a lot of attention. Food is another story. Decarbonising food production and consumption is just as urgent as the energy transition, but so far little is happening. Recent Intergovernmental Panel on Climate Change (IPCC) reports and the UN Food Systems Summit in September have helped raise awareness. The EU Farm to Fork Strategy is a sign of hope. But at COP26 in Glasgow, we need real, concrete resolve to make food system transformation a climate action priority.

If approached holistically, transforming our food systems can unleash vast improvements in public health and wellbeing, reduce pandemic risks, slow the destruction of nature and the accelerating extinction crisis of which agriculture is the main driver, improve livelihoods for impoverished farming communities who are uniquely vulnerable to the impacts of climate change, and reduce the compounding risks that will threaten the stability of nations and regions in decades to come. Food is a major driving force behind our biggest problems. Food can be a mighty force for solving them.    

The case for good food finance

Almost 60 years ago, Bob Dylan famously sang “money doesn’t talk, it swears”.  When we see capital flowing in all the wrong directions, destabilising Earth’s life-sustaining systems, putting our societies at risk, rewarding the few at the expense of the many—it is easy to conclude that times haven’t changed much. But there is no way forward without capital, and lots of it, fuelling the changes we need. The ongoing energy transition is proof that when we put our minds to it – changing economic policies and incentives and unleashing purpose-driven financial innovation – transformation is within reach.

We need that same shift in the capital flows that shape our food systems, and much faster than we’ve seen with energy. We need food finance that doesn’t swear in the face of humankind and the Earth we inhabit. It is not a small shift. Capital must come in forcefully behind a transformation to regenerative, nature-positive food production, investing in the farmers and fishermen and women making this critical transition. Capital must abandon industrialised and artificially cheap meat production, for the same reasons it is leaving coal behind, as well as many other compelling reasons. Capital must also support a massive shift to healthy, low-carbon, sustainable diets, and help slash food loss and waste out of the system.

Over the coming decades, only resilience-building capital flows can secure safe financial returns. That understanding needs to be built into the structure of food system finance.

All of this will require new and reformed economic and fiscal policies cutting across agriculture, social protection, health, climate risk reduction, environmental protection and other sectors, from national to local levels, and linking agricultural upstream communities and downstream coastal communities. These distinct constituencies find their interests connected through food systems and the natural systems they depend on, and they need to organise to maximise those mutual benefits.  

We need clarity about the pathway to 1.5C for our food systems and the role of food finance to achieve it – an equivalent to the International Energy Agency net zero report. The transition will also require new, smarter and better financial instruments, from the public and private sectors, and collaborative initiatives across both.

Tackling obsolete mind-sets and vested interests

The biggest obstacles standing in the way of this seismic shift? Prevailing but obsolete mind-sets and vested interests. Regarding mind-sets, agricultural policies are still too often made without much thinking about public health and climate impacts. The health sector is overwhelmingly geared towards curing the already sick, not preventing disease and the pivotal role of food for doing so. Finance ministers have until now been largely missing in action, in effect condoning the devastating status quo. Banks, venture capital funds and other big investors, while increasingly factoring in climate risks in other sectors, have only just begun to register the enormous financial risks inherent in our food systems, running in the trillions of dollars.

There are also powerful interests behind our food status quo. Big industries with vast global footprints and the countries in which they are based are actively resisting meaningful change. The recent assessment of 350 of the largest global food and agriculture companies by the World Benchmarking Alliance revealed that, for example, only 26 companies set targets aligned with the 1.5°C goal.

Signs of change

And yet, despite the bleakness of the current state of food affairs, there are some encouraging signs of change. Innovation in food technology has accelerated exponentially, and 2020 was a record year for private investment in alternative protein, with a total of USD 3.1 billion invested, according to FAIRR. Some major food companies, such as Unilever, Nestle and Danone, are performing well across many sustainability dimensions and appear to be on a positive trajectory, according to the World Benchmarking Alliance report. There are signs that in the wake of the COVID-19 pandemic, awareness of and interest in sustainable food choices are rising sharply amongst consumers in many markets. Several countries such as, Canada, Poland, Denmark and Finland, have or are in the process of incorporating sustainability into dietary guidelines. And finally, 14 cities have signed the Good Food Cities Declaration, committing to achieving the EAT-Lancet scientific targets by 2030.

The good food finance network

These are all promising signs of change, but they are a far cry from the massive shifts in policies and practice that need to happen in the coming years, and where finance must play a key role. This is why EAT together with FAIRR, UNEP, WBCSD, Future of Food Systems, the World Bank and other partners launched the Good Food Finance Network (GFFN) on 20 September. The ambitious aim of the GFFN is to catalyse mind-set transformation around food finance that are urgently needed in the finance community—both in Ministries of Finance and in the financial sector. The GFFN is also forging an ambitious Good Food Finance Action Agenda that cuts across economic and finance policies and financial instruments and practice. Already, several major finance institutions, companies and funds are taking part, as are representatives of Ministries of Finance and multilateral financial institutions.  

COP26: Moment of truth

COP26 in Glasgow is a moment of truth. With stronger focus than ever before on nature-based climate action as well as on the mobilisation of economy-wide finance, and given the alarming “red alert” findings of the most recent IPCC report, we expect all stakeholders to start treating food production and consumption as a critical arena for climate action. Climate-aligned food system transformation actions must find their way into nationally determined contributions (NDCs), and into commitments by the private sector, subnational jurisdictions and other actors to curb scope 1, 2 and 3 emissions. Food finance must also be transformed, to enable and drive this vast and urgent shift. We have come to the COP26 with the understanding that climate-aligned food system transformation can build health, resilience and shared prosperity into everyday lived experience. We need the COP26 to turn this understanding into a new level of imagination, commitment and action.