Note: Originally posted on the Responsible Investment Association (RIA) website.
Guest post by Peter Chapman, Executive Director, SHARE
Building Sustainable Food Systems in Canada: A Role for Investors, was released by the Shareholder Association for Research & Education (SHARE), a leading Canadian responsible investment organization. The report was funded by Canadian philanthropic foundations including the J.W. McConnell Family Foundation.
Dried corn plants in Nebraska. Source: AP.
Looking outside at the last few hardy frost-rimed vegetables in my garden, the forces at work are easy to comprehend: freezing temperatures and failing daylight hours. But for institutional investors, the risks and opportunities embedded in our food systems are less obvious. So too are the connections between long-term investment returns and the resilience, sustainability and accessibility of food systems. Building Sustainable Food Systems in Canada: A Role for Investors, a new paper from the Shareholder Association for Research and Education (SHARE), takes aim at broadening our understanding of these issues.
One fundamental sustainability challenge facing global food systems is ensuring food security for all. Simply put, food security means people’s ability to access sufficient, safe and nutritious food. Food insecurity is often associated with political instability, drought and war. It is exacerbated by competition for arable land, climate change, soil erosion, natural disasters, and disease. Corporate practices that shift agricultural land use to the production of cash crops[1], biofuels and animal raising can have negative food security implications, especially for small-scale and subsistence farmers.
Food insecurity happens in households, too. In Canada, for example, approximately four million Canadians, including more than a million children, experienced food insecurity in 2012.[2] This kind of household level food insecurity is perpetuated by stagnant wages, social and economic exclusion, and inadequate social protection.
According to the World Economic Forum’s Global Risks Report, the threat of food shortages is one of the top risks facing the world economy. Among the steps investors can take to manage this risk and contribute to greater food security is to engage with food companies across the food value chain on the effect they have on food security. For example, investors can encourage corporate supply chain policies and practices that protect land and fishing rights, uphold decent working conditions and sustain producer livelihoods. Another valuable tool for investors is the Access to Nutrition Index (ATNI), a global initiative that evaluates food and beverage manufacturers on their policies, practices and performance related to obesity and under-nutrition including corporate commitments to improving access to nutritious and affordable food.
In addition to engaging publicly-traded companies, investors can incorporate food security considerations in other asset classes, including direct and indirect investments in farmland. The recently developed Principles for Responsible Agricultural Investment (PRAI) outline principles for investors to consider when investing in agricultural assets, including those related to food security and land rights. Investors seeking exposure to farmland may consider participating in farmland funds that have specific sustainability objectives including protecting farmland from development and speculation, and preserving farmers’ livelihoods.
In their forward to the SHARE report, the McConnell Foundation’s Beth Hunter and Stephen Huddart call for a “conversation among investors and investee companies concerned about the future of food, and the roles that all can play in ensuring healthy, sustainably produced food for all.” Starting this conversation is a good intention to carry into the winter months. The report, Building Sustainable Food Systems in Canada: A Role for Investors, can be downloaded in English and French at http://www.share.ca/news/building-sustainable-food-systems-a-role-for-investors/.
Peter Chapman is the Executive Director of the Shareholder Association for Research and Education. SHARE is a leading provider of proxy voting, shareholder engagement and policy consulting services to Canadian institutional investors and of governance and investment education to pension trustees and other investment decision-makers.
[1] For example, a recent investigation by Oxfam has found that since 2000, over 885 large-scale land acquisitions covering approximately 79 million acres globally had been recorded and that approximately a third of these involved investment in cash crops such as sugar cane, palm oil and soy. See: http://www.oxfamamerica.org/press/publications/nothing-sweet-about-it.
[2] V. Tarasuk, A. Mitchell and N. Dachner, Household Food Insecurity in Canada, 2012. Available on line: http://nutritionalsciences.lamp.utoronto.ca/wp-content/uploads/2014/05/Household_Food_Insecurity_in_Canada-2012_ENG.pdf